Instead of imposing new fees on their existing customers, banks have an exciting new idea: attract new customers and charge them fees. Specifically, banks are looking to low-income and lower-middle-income people who might normally use check-cashing stores or check-cashing services in retail stores to gain immediate access to their money. These customers may not make large deposits, but what customers who want access to their cash right away do generate are lots of fees.

While banks’ policies differ, generally your bank should make the first $200 of a check available to withdraw the next business day, and the next $200 on the following business day. This doesn’t matter very much if you have a large financial cushion in your checking account, but the customers banks target with these new services aren’t people with large financial cushions.

The Associated Press cites Fifth Third Bank’s Express Banking as an example: it offers sliding fees based on “loyalty” or on how many services the customer uses from the bank, such as cashing a check, making a deposit, or buying a money order. The maximum check-cashing fee would be $4 or 4% (whichever is higher) for a new customer with a personal check not written on a Fifth Third account. The fees for government and payroll checks vary from 1-3%, with minimums of $2 or $3 depending on how many other transactions the customer has had.

The Express Banking accounts started when the bank began to offer some check-cashing services, and noticed that the same customers kept returning to the branch: maybe they could be persuaded to open an account to deposit some of that cash.

It’s a nice start, but still means that people with less money are paying higher per-transaction fees for services that are included in regular bank accounts.

Banks look to enter the lucrative business of check-cashing [AP]

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