Free Checking Accounts Heading The Way Of The Dodo

For much of the last decade, more and more banks had been offering checking accounts with no monthly fees or minimum balance requirements. But a new study from shows that this trend appears to have ended.

According to their study of the the 25 largest banks and thrifts in the top 25 U.S. markets, the number of free checking accounts — i.e., no fees and no balance requirements — has dropped 11% (from 76% to 65%) in just the last year.

Additionally, the average balance requirement on a checking account has risen 228% since 2008, from $109.26 to $249.50. On interest-earning checking accounts, the average minimum is now $3883.40, an increase of $511.22 over last year.

For the first time since it started tracking such data in 1998, BankRate says monthly service fees have increased, from an average of $1.77 to $2.49 for checking accounts and from $12.55 to $13.04 for interest-earning checking accounts.

And they’re not done yet. Both ATM fees and bounced-check fees have increased in the last year, at the same time as yields on interest-earning checking accounts have dropped.

7 key checking trends for the coming year []


Edit Your Comment

  1. obits3 says:

    Free checking, Fee checking, it’s all the same right?

  2. gatewaytoheaven says:

    Well, I’m sure Congress had this thought out. “Sure let’s help all the consumers by reducing/eliminating overdraft fees and this and that fee! They’ll love us!!” Did they not stop to consider the ramifications of said change? Banks and other financial institutions are just going to go recover their losses in another form.

    And in this case, the loss (or reduction of benefits) hurts ME personally, whereas having $32 overdraft fees never once did. If I were to close and lose my truly free checking accounts (security compromised, etc), I would most definitely not find what I have now. Wonderful.

    • ubermex says:

      And yet credit unions everywhere continue to survive without EITHER ONE, so I question the banks’ claim that they’re terribly hurt by the change.

      • RadarOReally has got the Post-Vacation Blues says:

        You realize that credit unions aren’t profit-makers, where banks are responsible to shareholders, right? Sure we could get rid of the banks and only have credit unions, but big projects would have trouble getting financing.

    • Loias supports harsher punishments against corporations says:

      Your anecdotal story doesn’t effect the millions of people affected by overdraft fees that the bills helped.

      Given the economic state of things, it would be pretty narrow-minded to blame one part of the system for the fault of the entire machine. In other words, it’s highly likely all these numbers would be the same or similar whether or not Congress passed a bill helping your fellow citizens. Further, no one believes that laws should be passed or not based solely on the effect it has on you.

      • gatewaytoheaven says:

        I never said laws need to be based on whether or not they affect me.

        I’m sure there were quite a few number of people that this bill helped. There are also going to be many more that it won’t.

        Assuming you have 1 overdraft per year, that’s $32 lost.

        Assuming you now have fees for actually holding an account, $2.00 maintaince fee and $1.00 paper statement fee, that’s $36 lost. And I’m being entirely generous with the numbers. I used to be able to make wires (international!) for free. They now cost me $45. I used to be able to get checks for free. They now cost me $10 for a box.

        It’s actually leaning towards being more expensive this time around, unless you’re compulsively overspending or living without consideration of your means, and getting hit with multiple overdraft fees on a regular basis.

        • Loias supports harsher punishments against corporations says:

          Has nothing to do with bills passed. Fees like the oens you described have been growing for years. Tough to find any service offered for free anymore.

          Checking accounts have been free due to competition and the fact that having money in a bank account makes the bank money.

        • Kate says:

          Unfortunately it was not usually one overdraft. One overdraft created several more because of how they ordered the payouts.

          I haven’t had overdrafts for a long time because I keep way too much money in my checking account, but those I know who did, got socked bad for messing up one time.

          • Pax says:

            Heck. I got hit multiple times – like six in a row, once a day like clockwork all week long – for something I didn’t even do … someone who apparently shares my name, but in a different state, endorsed a third-party check and cashed it (not deposited) … and that cashier, for some reason, found MY account, and not his … guess whose account the check was floated against, and guess whose account saw $300 disappear unexpectedly, when that check turned out to be stolen …?

            Yep. Me. And I only had $250 in the account at the time.

            The result? Six overdrafts at $22 each, for a mistake THAT WAS NOT MINE. Once a day, every day, that the balance remained negative.

            No, I never did get my money back. The fellow at the bank outright, and in as many words, accused me of conspiring to defraud the bank … then refused to investigate. Local police couldn’t help me, and lacking a car, going to the place where the crime happened, wasn’t an option.

            It just sucked to be me/

            (And of course, within 5 minutes of that accusation I was no longer a customer of that bank.)

        • jeff_the_snake says:

          they would have gotten around to this in addition to the overdraft fees eventually if that bill had never been passed. banks are greedy monsters not your friend

    • evnmorlo says:

      Basically everything Congress will ever do will be to your disadvantage. Get used to it.

    • qwickone says:

      Congress DID think it out. They thought that the people that have checking account should pay for them instead of those accounts being subsidized by the people least able to afford them. Generally speaking, people who have multiple overdrafts are the people least able to afford them. This way, you pay the cost of your account and they pay the cost of their overdrafts, instead of them paying for both.

      • frank64 says:

        I agree. I never paid a overdraft fee either but that doesn’t make it right. Sometimes we need to look at the big picture. I think I will still be able to get free checking, some bank will want me. If not, I can pay what it costs. Now banks costs will be stated, instead of hidden in fees which are based on how the bank can trick you into tripping them.

    • sixsevenco says:

      But what about the free market? What about competition? Certainly the free market will work this out, right? Just like airline fees….

      • unpolloloco says:

        yeah – it did in the form of charging more to the customers that cost banks more (the ones who overdrafted)

      • craptastico says:

        Congress just took the free market out of this.

        • sixsevenco says:

          Congress didn’t eliminate competition, they just changed the rules of the game. The banks can still compete, they just need to do it differently.

          Collusion is probably too strong of a word, but if all the banks charge these fees… Fee are now part of the banks’ revenue stream, so like the airlines, they will ratchet them up as far as the consumer allows them to. (and probably a touch higher)

    • 99 1/2 Days says:

      Responsibility is for losers.

    • mac-phisto says:

      my bank still has free checking. well, actually, it’s a credit union.

    • Conformist138 says:

      So, stop being hurt and go to a credit union. My credit union has a whopping $5 minimum balance as a “membership fee” that actually just sits in your savings account and you get it back if you close your accounts. no other minimum for my checking account and both my checking and savings earn interest.

      There are still plenty of options, a big bank isn’t the only one.

  3. cynical_reincarnation says:

    Those gold plated yachts don’t pay for themselves…

    Pitchfork time yet? please?

    • Loias supports harsher punishments against corporations says:

      Agreed. Why can’t banks just make reasonable profit? Why must it always be obscene profits?

      Credit unions seem to work just fine with a small but consistent profit margin.

      • leprechaunshawn says:
        • psm321 says:

          Right. The standard libertarian argument which basically boils down to “but I want to keep making tons of money off of others’ work!”

          • NeverLetMeDown says:

            Still haven’t provided a definitiBe specific. on of “obscene” profits. How many $? What profit margin?

          • leprechaunshawn says:

            Have you ever had to delegate work to someone else because your work load will not allow you to get it done in time? Have you ever had to ask for a hand with something at work?

            If you can answer yes to either of those questions, than you are just as guilty of making money off of others’ work.

            • dragonfire81 says:

              The key there is how the money is disbursed. If three people work together and a profit of $1500 is the result, then the logical conclusion would be to give each one $500. In the real world, the executives/top managers would get $1480 and two grunts would be left to share the final $20.

              • tjustman says:

                Shouldn’t the guys who only got $20 be grateful they got a job at all? Shouldn’t we be grateful that they aren’t being supported by the taxpayer on welfare? Shouldn’t the guys who only got $20 worked harder developing their skills so they can make more? Can’t they save their $20 and go to college and make much more? Why are all the $20 guys MY problem? Isn’t their lot in life THEIR problem? Life is not fair. If it is then I want to be a pro hockey player and I want the government to make that happen.

      • metsarethe... says:

        And you’re definition of reasonable? Obscene?

        • AnthonyC says:

          The financial industry quadrupled as a % of GDP between the end of WWII and the systemic failure a few years ago. Some of that growth can legitimately be considered obscene.

    • Powerlurker says:

      Luxury yacht-builders need work too.

  4. DanRydell says:

    Anyone who didn’t expect this when the recent banking regulations cut into banks’ fees is clueless. Those fees were how they covered the cost of the free accounts. Gone are the days when the poor and stupid subsidized the rest of the accounts with their overdrafts.

    It’s a pretty competitive market though, so I don’t expect that I’ll be needing to pay for a checking account anytime soon. I may just need to keep more money in there than I’d like.

    • ubermex says:

      Do you really think that the bank gets nothing out of a free checking account but the fees?

    • You Can Call Me Al(isa) says:

      My bank will start charging “monthly maintenance fees” on checking accounts and savings accounts starting Jan 1, 2011.
      To avoid the fees your checking balance must be above $1000, but your savings only needs to be above $500. I thought about moving some money from my savings to my checking. However, I’m very tempted to close my bank accounts and move all of my money to my credit union accounts.

    • c152driver says:

      I always thought that banks made money by loaning out the money we deposit with them to other customers at a higher interest rate. But then they got greedy…

      • NeverLetMeDown says:

        Sure, if you’re depositing enough money, or the rate spread is high enough. Given that mortgages are running 4-5%, a $1000 checking account balance can generate ~$4/month in interest income, and that’s before the costs of, well, running the business (keeping the lights on, processing transactions, sending statements, etc.).

        • IThinkThereforeIAm says:

          Oh, poor banks.
          They actually would have to live off the work they do…. and were designed to do.
          BTW: attracting customers by offering free checking accounts will usually increase balances on other accounts as well (I sure like to keep my saving and checking at the same bank, so I can transfer money between them easier). Remember when they used to give out toasters just to open an account?
          Those were the days when free market actually worked (for the benefit of the consumer) – banks had to fight each other to get customers – probably because there were hundreds of them. How many banks are there today? three, maybe four? How hard can it be to come to an agreement between 3-4 players?

          • NeverLetMeDown says:

            There are hundreds of banks if you go online. There are probably a dozen with branches within 2 miles of my house. You have LOTS of options. Many of which will pay you to open an account. The difference is, they actually want customers worth having. Before the more extensive fee regulation, savvy consumers could slip in under the radar, by taking accounts designed under the assumption that consumers would behave irresponsibly, and incur large fees, and, by behaving responsibly, not pay those fees, and do well.

            • IThinkThereforeIAm says:

              I don’t know where you live, but where I do, we have:
              – Chase (used to be Washington Mutual)
              – Wells Fargo (used to be Wachovia, used to be Republic Security used to be…)
              – PNC (used to be Fidelity Federal)
              – and if I go way out of my way I can find a Citibank Branch (I think it’s still there)
              and some CUs.
              All other bank branches within reasonable distance got gobbled up by these heavy players – so I can choose among these.
              This is not LOTS of choices.

              • jamar0303 says:

                Yep. Same in my US “home base”-
                1. Bank of America
                2. Wells Fargo (formerly Wachovia)
                3. Fifth Third
                4. Schwab (depositing here is a two-step deal)
                Two local banks whose branches I can count on one hand total
                Two credit unions I can do the same for and they have a fee schedule not too far off from BofA

                Eight choices. The annoying thing about living in the South. In California I also had the option of banking with the US operations of banks I’m familiar with in China like Bank of East Asia, Citic, Bank of China, (we’re going to ignore HSBC for now due to massive complaints here- they’ve Americanized for the worse) or other Asian banks like Union Bank, Shinhan, etc. If nothing else, most of them tend to be more financially stable. No bailouts.

  5. Liam Kinkaid says:

    I think a drop from 76% to 65% is a drop of about 14.5%, not 11%. But yeah, banks lost a lot of revenue from the reforms passed regarding overdraft fees, so it’s not surprising that they’re instituting/raising fees where they’re allowed to. I think the interest rate drops are more closely related to the prime rate and the federal rate, but I could be wrong about that.

    • Tim says:

      You’re right, it should be “percentage points,” not percent.

    • nybiker says:

      Thank you for being another math whiz. You too Tcama.

      Every time I read a story with those kinds of numbers in them, I always have to check to see if the writer knows what they are writing about. As in, the difference between “percent” and “percentage points.”

      And if anyone wants to really have some fun reading, check out “Proofiness” and you’ll never believe another poll or survey.

  6. dolemite says:

    “We must make record breaking profits year after year, or we are sad”.

    What happened to the days when banks were just happy you were keeping your money with them? Remember Beverly Hillbillies? It was a big deal for a bank to have lots of customers, and lots of accounts with money in them. Nowadays, they seem to want your money, and to make a direct 2-10% profit off of each customer as well.

    • tungstencoil says:

      What days are you talking about? Historically, banks always charged for providing services – including holding an account. It was only waived for the very largest customers (“Beverly Hillbillies”).

      I remember as a kid that my folks’ account had to have some minimum balance, and for that they had reduced – not eliminated – fees. The days of free checking may be limited, but they were also recent. I’m sure that there are exceptions (just like there will be going forward), but for the longest time fee (not free) was the norm.

      • dolemite says:

        I’ve had free checking since college, so…like 1993 or so.

        I’m not just talking about checking though…I’m talking about atm fees, bounced check fees, fees for visiting a teller…just about every transaction/account with a bank now has a fee involved.

    • Kate says:

      I never got free checking until I was in my thirties. Before then, it always cost unless you used a credit union. At first it was a ‘dime a time’ for every check – back when dimes got you a cup off coffee – what’s that now, maybe a dollar thirty?

  7. duxup says:

    Several smaller banks in my area still advertise free checking.

  8. energynotsaved says:

    My megamonster bank was eaten by an even bigger bank. Currently, Wells Fargo is too busy messing up my accounts to charge my checking. However, they already “mistakenly” charged my money market. I, not so mistakenly, move it.

    I am in the process of moving to my free checking credit union, but first I have to watch them destroy my never bounced a check since high school record.

    I especially liked their comments: “We sent you forty pounds of detail concerning the way the Wells Fargo pays bills. You should have read it and realized that we take the money from your account 3 days BEFORE you said you wanted it processed. Your mistake. And, no, even though you have deposited checks from that other bank before, we still must put a three day hold on the deposit. Sorry.”

    Yes. I learned. I’m dumb, but I am trainable. As soon as I get this mess cleaned up, that account is closed.

  9. psm321 says:

    True at B&M banks, but there are plenty of online banks that offer free checking accounts and savings accounts, with free checks, pay better interest, and have no minimums or monthly fees. The numbers of those only seem to be growing.

  10. jdlyga says:

    Join a Credit Union. I belong to two (PSECU in Pennsylvania, and Bethpage Federal Credit Union in Long Island). Both have free checking with rewards. I was also able to opt out of overdraft fees on both accounts.

    • lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

      PSECU rocks – they are a great credit union. I have never had anything but good experiences with them. The online banking site. is awesome. Plus, the checks I use with animal prints are only $1.50 per box!

    • mbz32190 says:

      Also a PSECU member here…I don’t understand why people would stick with banks. I get pretty much “free” ATM withdraws considering I can use any other partner credit union, any 7-11 ATM in the state of PA (plus the free ATM’s at wawa and cash back of course. Plus $4 a month reimbursement if I’m not near any of those. Free checks too (for now), but seeing how I write maybe 5 a year, I’m still good on my original box. All it cost was $5 to join.

      • catnapped says:

        Uh, maybe they stick with banks because they’re not eligible to join a credit union. Ya think?

        • mbz32190 says:

          Pretty much anybody is eligible to join a credit union…there isn’t really anything special about it. At least two local credit unions here advertise if you live/work/worship in X County, you are eligible for membership. I ended up with PSECU as I was a state university student and they were partnered with the school, but I doubt they checked that I was actually a student.

          • jamar0303 says:

            Problem is, the very few I qualify for (once I do some creative accounting to count myself as resident instead of as a non-resident US citizen) have rather crappy fee schedules.

    • craptastico says:

      i’ve been thinking about joining a credit union for a while. does anyone know where i can find one near me? I live in Morris County NJ and while i’ve heard about CUs for a while, I’ve never actually seen one. also what kind of criteria is there for membership? the only CU I’m familiar with at all is the USAA, but I know that’s only for military and I’ve never served.

  11. Nighthawke says:

    Greedy bastards.

  12. Cantras says:

    My credit union recently made it so that the “free” checking I had before charged me a buck to withdraw money at a non CU atm or to use my debit card with the PIN.
    The checking account that has that free has no minimum, but does require that I sign up for e-statements(okay) and get an automatic payment(paypaling myself a dollar counts) and use my debit card credit-style X times per month (okay, sure). And it earns interest.

    I feel like this was a dumb move on their part. They could have given me something like 1 free ATM withdrawal… instead they’re giving me $20 a month in interest.

  13. dreamfish says:

    Haven’t free checking accounts in the USA only really been around for about ten years?

    Here in the UK, practically all (basic) checking/current accounts are free and have been for some decades now.

    • dreamfish says:

      I suppose I should add that this is usually only true if you pay in a regular amount each month (i.e. your salary) that is a minimum figure. However, I don’t think that minimum is a hard and fast rule.

      • Powerlurker says:

        A lot of free checking accounts in the US required something like one direct deposit a month or a certain number of debit transactions.

    • zzyzzx says:

      “Haven’t free checking accounts in the USA only really been around for about ten years?”

      No. I’ve had them since at least 1981.

  14. gurupitka says:


  15. catastrophegirl chooses not to fly says:

    i’m glad to have a $1 credit union fee on my checking account in exchange for excellent service and no ATM fees.

  16. Keep talking...I'm listening says:

    I went off-shore with ING Direct this year, and I can’t say that I have even though of looking back. Better interest rates, better service (granted, it’s not local), less fees.

    • Max5695 says:

      I thought about ING Direct, but I found an even better credit union called Alliant Credit Union. They pay an even higher rate and they have a free checking account with a box of free checks. ING does not give you paper checks. Also Alliant has an even bigger network of free ATMs.

      I’m glad I didn’t go with ING. ING took a bailout of billions from Dutch taxpayers. ING is being forced to sell ING Direct USA to another bank by 2013 in order to pay back some of their bailout money.

    • BurtReynolds says:

      Here is my question about banks like ING. How did you get your money there? Wire transfers aren’t free (or 100% reliable) and I don’t know how I feel about sending checks for thousands of dollars in the mail and hope they make it where they need to go. As Consumerist readers know, stopping checks with BofA is no picnic, nor free.

      • drmcarthur says:

        I have a ING Direct account. You link to your current bank or CU account through the website. ING makes two under $1 deposits into the linked account. I entered the amount of these two deposits on the ING website to show I had control of the linked account. I moved $100 from the linked account to ING Direct to be sure it work, then moved over $200,000 to ING Direct.

  17. NotYou007 says:

    I bank with BofA and my checking account is free. I have direct deposit and I don’t get charged if I go inside and make a withdraw from a teller. I enjoy going inside because the tellers all know me and they are very nice people. If there is nobody else in line we will shoot the bull for a few minutes as well.

    For those that think BofA sucks, I don’t think so. They have been my bank for years and I’ve never had issues with them.

    • goodfellow_puck says:

      People who think BoA sucks didn’t think so before they had an issue either, dude. Give it time. ;)

      If you don’t have direct deposit (which only SOME DDs count, btw), or a steady 2 grand in your account, then they charge you $12 a month. The only way to get out of that is have an “online only” account with no free teller access (not really necessary), and no paper bills.

      • NotYou007 says:

        How long should I give it? I’ve had this account open for almost 10 years and have never had an issue.

        • Max5695 says:

          Any bank can give you decent service. As long as you have enough money in your accounts, you can get a fee free account.

          However, Bank of America pays very low interest on their accounts. That means that you earn less interest money.

          For example, at the not-for-profit Alliant Credit Union you earn 1.35% on their Checking and Savings accounts.

          If you have $50,000 in the bank you earn $675 a year in interest. Bank of America might pay you .15% interest and would only give you $75 a year in interest.

          That is sort of like Bank of America ripping you off by $600 a year.

          • NYGuy1976 says:

            The service you receive from any bank can vary widely by the branch you use. Typically if you live in a large city you are not gonna get good service because there are too many people they have to deal with. Usually any bank in a nice upper middle class suburb will give you great service. I have dealt with BofA in NYC and you usually get crappy rushed service and then using BofA before that in a nice northern Bergen county NJ town always got great service never having to show ID becuase the people knew me by first name.

        • BurtReynolds says:

          I’ve had mine for 5 years and never had a fee. With that said, I am still going to close it out soon because I don’t want to support BofA.

  18. Max5695 says:

    Many credit unions are still offering free checking accounts. Many credit unions know that people are fed up with their banks and are happy to welcome new members. Shop around and you can find some good deals. My credit union: Alliant Credit Union, offers free checking and one of the best rates in the country.

    • jamar0303 says:

      Unfortunately they have ridiculous int’l wire transfer fees. Wells Fargo is cheaper by more than $30 per transaction for the country I plan on sending to. And they get it there next-day.

  19. NebraskaDan says:

    And here are the consequences. In an effort to free the 5% of people who are affected by bank fees from all levels of personal responsibility, the government has hurt the very people it was trying to help. The poor people who overdraw there accounts are usually living paycheck to paycheck (I work at a branch and see it often).

    They can’t afford a minimum balance, so now they are driven, along with the broke people who were on top of stuff enough to not OD their accounts, but can’t afford a minimum balance, out of banks completely.

    The check cashing places are loving this.

  20. iamskeptical says:

    There will always be free checking accounts. As the number of banks offering free checking decreases, the number of customers flooding to banks who do offer it will increase. The banks who don’t offer it will get lonely, and start offering it again. Or they will wonder where all their customers went.

    Someone, somewhere will always offer free checking, whether it’s online or at a credit union. I am not in the least bit worried. If my bank stops offering it, I will switch, immediately. Of course, they’ll probably start charging me without actually telling me about it, but once I figure it out, I’m gone.