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And here I always thought that free checking was my God-given right!
Bank of America is planning to get rid of its basic free-checking account, this morning's WSJ reports. Other banks may follow suit.
It costs banks a few hundred bucks a year to maintain a customer's checking account. Banks have been able to make that up (and more) largely by charging overdraft fees.
But new federal rules mean banks can only charge those fees to customers who sign up for overdraft protection.
http://www.npr.org/blogs/money/2010/06/17/127899418/you-may-have-to-pay-for-that-checking-account?sc=nl&cc=pmb-20100617
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Hear, hear cheapncheerful.
I've been around long enough to know that things go in cycles. The old becomes the new, just repackaged. Here's my prediction. Some banks will cut the free checking like them. In six months, they realize how many customers they lost and how low their new customer numbers are. A genius (sarcasm!) suggests that's why. After reviewing what they made from the fees vs. the amount of business they lost, the free checking is hastily reintroduced.
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When you're with a bank you tend to use them for more than one thing too. It's not so much loyalty as convenience. It's handy to have your banking, savings, investments, insurance and mortgage all in one place. So when a customer leaves because of the free checking charges, they don't take just one product with them. They often switch others because their new bank will work very hard to beat what they are getting at the old one. Again, they want the convenience of having it all in one place and some don't mind even if the cost is slightly higher for other products as long as their checking is free. This is a very bad move by Bank of America.
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Any B of A's that have been on the fence will certainly take the leap over. I can't for the life of me understand why anyone wouldn't use a fully online bank. If you keep your emergency fund in your checking account, it acts like a buffer, so you can wait a few days for your check to make it into your account. You can do direct deposit with your pay, save up little odds and ends checks that come in and mail them in once a month. The most it would cost you is one stamp. The banking is totally free, offers higher interest and 100% free bill pay. I use ING and would never consider switching.
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Hacking. Fear of hacking, that's why. I read about an ATM hack that's going to be demonstrated in Las Vegas. At the end of the day you're counting on the safety of a computer system that you know nothing about because you're relying on the banks to have adequate security measures in place. Obviously some don't.
Barnaby Jack of IOActive is slated to give a "Jackpotting Automated Teller Machines" presentation at the Black Hat USA security conference in Sin City in late July.
"I've always liked the scene in 'Terminator 2' where John Connor walks up to an ATM, interfaces his Atari to the card reader and retrieves cash from the machine," Jack said at the Black Hat website. "I think I've got that kid beat."
The researcher promised to bring two new model ATM machines from a pair of major vendors to demonstrate local and remote software attacks that result in large payouts.
http://www.physorg.com/news196752803.html
Apart from that, not everybody's got access to a computer or is computer literate enough to use online banking. If an online bank account was wiped out tomorrow and all the archival records destroyed, how could you prove what was in it?
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The banks also lose out on the kid's accounts too of all those switchers. You take your kids to your own bank to get them a savings account, don't you? And then when they are old enough to start their first job, you take them to set up a bank account for their salaries to go into. When they are ready to buy their first home, guess where they look first? The banks know that. It's why they offer kids so many freebies to open an account. Often once they have you banking with them in any shape or form, you won't switch. Unless you become unhappy. Banks rely on apathy to conduct their business.
That ATM deal is scary, Jewel. I don't know how you would. Only if you'd printed copies of the online statements I guess would you have that.
If other banks are smart they'll keep the free checking option and welcome all the disgruntled B of A customers with open arms. And I totally agree with this guy!
The only reason a great many American families don't own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments. - Mad Magazine.