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Bye-bye free checking. Hello fee checking.

Free checking is disappearing as banks scramble to make up lost revenue. Will the government's new finance watchdog step in and regulate bank's new checking fees?

By Tim ChenContributor / March 23, 2012

Here's how checking fees at the Top 5 banks stack up, according to the NerdWallet Bank Fee Monitor.

Rich Clabaugh/The Christian Science Monitor


The Consumer Financial Protection Bureau is now accepting consumers’ complaints about bank accounts, including issues related to withdrawing money, making payments and using debit and ATM cards.

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Tim Chen is founder and CEO of NerdWallet, a website that helps users find the best rewards credit cards.

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The CFPB’s announcement last week followed closely news that Bank of America is experimenting with a new system that would levy monthly fees on users of basic checking accounts. As if its botched attempt to introduce a $5 debit-card charge last fall wasn’t enough, this latest move could trigger another consumer uprising and a tidal wave of criticism.

It’s also causing people to wonder, is free checking becoming a thing of the past? And if so, what role will the CFPB play in regulating fees?

All of the largest banks offered free checking until 2009, Mike Moebs, founder of financial research company Moebs $ervices Inc, told the Huffington Post. Now, almost none do. And as free checking has dwindled, checking service fees have shot up. Javelin Strategy & Research recently released a study tracking the rise in bank fees for checking accounts over the past 10 years. The report, which included data from both large and small banks, estimated that consumers now pay 26 percent more in checking account fees than in 2002, and that larger banks typically charge higher fees.

Since it abolished its $5 debit-card charge, Bank of America has been testing the checking account fees in Arizona, Georgia, and Massachusetts with monthly charges of $6 to $9 for customers with “Essentials” accounts. Other account options being tested are charging monthly fees ranging from $9 to $25, but they also give customers the chance to get the charges waived if they use a credit card, take a mortgage with Bank of America, or maintain a minimum balance in their accounts. (To see how checking account fees stack up at the five biggest banks, click the chart above.)


If checking used to be free, why are the big banks charging now?

The fees mark a sign of stress in the banking industry during a time of historically low interest rates and sluggish economic growth. Plus, the banks got slammed with regulatory rules in 2009 and 2010 that curtailed traditional bank fees, halved what they could charge merchants for taking credit and debit cards, and prohibited them from automatically enrolling checking account customers in services that charged for overdrafts.

Banks need to find a way to make up for the billions of dollars lost in revenue. Bank of America and others tried to do that by establishing monthly fees for making debit-card purchases, but they quickly backpedaled when customers revolted.

After the $5 debit-card fee fiasco, banks are finding it harder than ever to implement changes.

J.P. Morgan consumer banking chief Todd Maclin told investors recently that the bank would like to be able to charge more than $10 to $12 a month, according to The Wall Street Journal, but “in this environment I am not going to rock that boat.” (In the last few months, the bank has eliminated or trimmed other less-common fees for things like account research, copies of documents, and account closures.)   


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