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U.S. banks hold off killing free checking - for now
NEW YORK |
NEW YORK (Reuters) - The U.S. banking industry has warned for months that caps on overdraft fees that came into effect on July 1 would spell the end of free checking.
So far, there's little sign of that happening.
"These stories about the end of free checking have been out there for a year now ... to date it's amazing how prevalent free checking remains," said Richard Barrington, personal finance analyst for MoneyRates.com.
Just over 44 percent of consumer checking accounts were "no strings attached" free accounts as of July, virtually unchanged from six months earlier, according to a semi-annual study commissioned by the New York State Banking Department.
Banks have said they will need to make up for lost overdraft revenue by charging fees for accounts and services that have traditionally been free.
Some large banks including Bank of America Corp and Wells Fargo & Co have started adding fees to traditionally free accounts and banking services.
But at least some banks will likely accept lower profits instead of passing on fees, in part due to intense competition in the industry, said Barrington, whose website conducted the survey among 46 banks doing business in New York state.
"What's really going on is a little bit of pushback on the part of the banking industry to the regulatory and legislative issues," he said.
Nevertheless, consumers could still face increased fees, now that banks have fully implemented the overdraft rules, he added.
The banks also face other squeezes on revenue in the form of restrictions on fees they receive for processing credit card transactions.
Peter Garuccio, a spokesman for the American Bankers Association, said legislated changes in banking will certainly affect consumers.
"Will that necessarily mean the death of free checking for everybody everywhere at every time? We can't say, but it's certainly a likelihood," he said.
(Reporting by Maria Aspan)
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