Free Checking continues to disappear as Chase adds fees

JP Morgan Chase has started notifying checking account customers this month of new service fees depending on the checking account from $6 to $12 a month. The fees will be waived if their is a direct deposit of at least $500 month or make at least 5 debit card purchases a month.

This is another step in the direction by big banks away from free checking in response to new legislation passed limiting overdraft and other fees. Those fees were bringing in big revenue for the banks so they are scrambling to replace the revenue.

This trend has several effects on bank customers. First, most will not be affected since $500 direct deposit is not a lot or 5 small debit purchases can be easily met however for some on social security or collecting unemployment this could be a problem. It could potentially push more people toward becoming unbanked or underbanked. (See previous blog on the un and underbanked in America).

The service model does help increase transparency some however as it is more strait forward. You pay a monthly service fee monthly to have a checking account and you know what it is. This is an improvement for the many who were hit with numerous overdraft fees for each and every check they bounced in a cascading effect.

Bank of America has an interesting approach by offering an eBanking checking. It has no checking fees if you stay in the self service world of online banking and ATM's. If you end up going outside of this service level you pay a fee of $8.95 for that month.

Of course you still need to be careful because there are always other fees such as using an ATM outside of your banks network, Overdraft protection transfer fee, Deposit Item Return Fee, Stop Payment Fee ($34 for Chase, $30 for BOA), Wire Transfer Fee, Counter Check Fee and more.

The free checking account was never really free for most since fees were easily encountered for just about any other service or action taken and this still has not changed. Bottom line is that just like the airline industry you should make sure you are aware of all fees and manage your account and behaviors carefully. Also don't forget there are small banks and credit unions that have better deals on checking and smaller fees.