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Why Free Checking Accounts Are a Thing of the Past


Banks are cutting back on free non-interest checking accounts because of Dodd-Frank regulations.

To compensate for the revenue loss, US banks have to raise revenues from other sources. The likes of Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), and JPMorgan Chase (NYSE:JPM) tried to introduce debit card usage fees last year, but met with a strong pushback from customers.

It doesn't appear likely that banks will back down from this trend of charging more to maintain checking accounts, even though customers are just as frustrated with this situation as they were with the debit card fees.

72% of respondents in the study said they would think about switching banks, which is an increase from 64% last year. However, as the Wall Street Journal notes, "changing banks entails the hassle of rerouting direct-deposit payments and uprooting automated bill-paying arrangements. Many bankers are pushing ahead with the new, higher fees in a bet that customers won't switch."

Indeed, it seems unlikely that the fee hikes will draw too big a backlash. A new survey from Harris Polls and Google Consumer Surveys, which evaluated customer experience at the four biggest retail banks in the US, found that customers were happy with their experiences overall. Chase was tops in terms of customer satisfaction, with 59% of Chase customers giving the bank a "satisfied" or "extremely satisfied rating. Citibank (NYSE:C) was second at 55%, while Bank of America (48%) and Wells Fargo (47%) obtained marginally failing scores.

Twitter: @sterlingwong
No positions in stocks mentioned.
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