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Checking Accounts Go from Free to Fee

What will those poor banks do for revenue now that Congress has put brakes on gotcha credit card fees, fee-laden overdraft protection programs and -- most recently -- debit card swipe fees?

Not to worry.

According to, a company that allows consumers to compare the costs of banks, wireless services and cable providers, financial institutions are levying heavier charges on checking accounts to make up for zillions in fee income they previously squeezed from consumers and merchants. Its study of large banks showed fees rising even while interest rates hover around, yep, zero percent. Between 2009 and 2010, banks offering free checking without levying a monthly service fee or requiring maintenance of a minimum balance dropped 11 percent. "We used to think that the free checking account was a birthright," says Samir Kothari, the company's co-founder. No longer. And banks are upping other fees. In the last year, the average overdraft charge rose from $29.58 to $30.47 and the fee for using a "foreign" ATM (one not in your bank's network) rose from $3.54 to $3.74 -- an outrageous sum for merely shunting you money electronically.

People who bounce checks or wind up using "foreign" ATMs are stuck with the higher charges (unless they change their cash management practices). But banks allow consumers to avoid the monthly tab for a checking account in various ways -- by making regular automatic deposits of a paycheck or Social Security check, for example or by maintaining a specified minimum balance. Kothari points out, however, that banks are raising the ante there too. Chase once allowed customers free checking as long as they performed five transactions a month. Now the bank has upped its monthly fee, and, to avoid it, accountholders must make a monthly deposit of at least $500, maintain a minimum balance of $1,500 in their checking accounts or keep $5,000 in a savings account. (Some banks waive fees for those under age 18 or seniors over age 65. So if you fit in one of those categories, be sure to ask before signing on the dotted line.)

In another revenue-enhancing move, many banks may drop their debit card rewards programs. Those perks plus free checking, Kothari believes, were subsidized by those people who were tricked into paying huge overdraft protection fees. Although nobody likes fees, he says, "the new system is fairer because at least you know what you are paying for."

Here's what you can expect if you open an account at several large banks.


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