The Beginning of the End of Free Checking

The demise of free checking at banks offers another opportunity for credit unions to promote their consumer-friendly checking options.



Wells Fargo announced this week it is eliminating its two free checking programs for new customers, opting instead to charge a $5 monthly fee that it waives for accounts with a $1,500 minimum balance or a direct deposit of at least $250.

For its Georgia customers (and soon for its nationwide customers), Bank of America is offering a new eBanking account for “self-service customers.” The program’s parameters encourage account holders to enroll in paperless statements and use ATMs for deposits and withdrawals by charging an $8.95 monthly fee when the customer requests a paper statement or uses a teller. 

It will be interesting to see how BofA positions its eBanking account, but adding a punitive fee isn’t likely to come across well in today’s anti-bank, anti-fee environment. What is the wisdom behind this strategy? Branch visits provide an opportunity to cross-sell products and build relationships, particularly among segments with which you have limited contact. 

This wave of new account fees is likely to continue in the coming months at banks and offers new opportunities for credit unions. In contrast to Wells Fargo and Bank of America, Anheuser Busch Employees Credit Union ($1.2B, St. Louis, MO) takes a value-based approach. Its basic free checking account has no minimum balance or monthly fee, and online banking users automatically receive e-statements. 

KEMBA Financial Credit Union ($579.8M, Gahanna, OH) offers three checking account options: a hassle-free checking account that requires direct deposit or a $250 balance; a fee-free, interest-earning checking account that bases interest earned on a tiered balance scale; and a value-added services account that requires a $4.95 monthly fee. The benefits of “Ultimate Plus” include identity theft insurance, everyday rebate rewards, local merchant discounts, travel and travel agent discounts, and nationwide discounts through a Savers Club Book. All of KEMBA’s accounts include free KEMBA ATM usage, access to shared branching, and the availability of 50,000 surcharge-free ATMs nationwide. 

Which approach to checking do you think your members would prefer?