First Wells Fargo, then Citibank, followed by the Bank of America and now J. P. Morgan Chase have announced that they either have or will start charging new fees for checking accounts. In the case of Chase, it will begin imposing a $12 monthly maintenance fee for new customers of its new Total Checking account next month.
All this appears to be in response to the government’s CARD Act, which ironically banned other fees such as certain overdraft fees and excessive late charges as well as high interest rate hikes. Most recently, the Federal Reserve proposed a cap on debit interchange fees -- what the bank charges retailers when customers swipe their cards.
Despite what looks like the end of free checking, there are ways to get around it. According to Greg McBride, a senior financial analyst at Bankrate.com, 65% of all financial institutions still offer free checking and 23% that offer an account where fees can be waived with actions such as direct deposits.
Wells Fargo ended its "free checking" account in July 2010 and now it charges customers $5 a month unless they maintain a minimum balance of $1,500 or make monthly deposits of $250. Its other accounts charge fees up to $30, but they can be waived if you meet certain requirements, like maintaining higher minimum balances or making automatic transfers to your savings account. That means every account at Wells Fargo offers a way to waive a fee.
Starting back in September 2010, Citibank became the second of the large banks to begin charging monthly maintenance fees of up to $30 for checking accounts.
Then this week, Bank of America announced it would be implementing new monthly fees, ranging from $8.95 to $25. That means you could end up paying anywhere between $100 and $300 extra a year in fees alone. Bank of America currently charges an $8.95 monthly maintenance fees on most checking accounts, but you can get those charges waived if you make at least one direct payment each month or maintain a balance of $1,500. That will all change soon. So if you want a basic checking account where you don't have to worry about keeping up balances or making minimum deposits, you're going to have to pay a $9 monthly fee.
In order to avoid the fee you will have to enroll in what’s called an "enhanced" checking account and keep a balance of $5,000 in your total linked deposit accounts, which could include checking, saving and investment accounts. You can also deposit at least $2,000 monthly, or use a linked credit card at least once a month and the fee would be waived. But if your balance drops below $5,000 or you don't meet the other requirements, you're charged a $15 fee.
Now, you can avoid paying a fee entirely with an online account, but you have to receive statements online and only use ATMs. If you need to speak with a teller or get a paper statement it will cost you $8.95 a month.
As for the new J.P. Morgan Chase fee, the new Total Checking account will cost you $12 a month unless you maintain a checking account balance of $1,500, make monthly direct deposits of at least $500, or keep a $5,000 balance across all deposit accounts -- including checking, savings and investments.
If you keep your old account, you'll get charged a $6 monthly fee unless you make a direct deposit at least $500 per month or make five debit card purchases. Currently, customers can qualify by making any direct deposit. The basic checking account charges a monthly maintenance fee of $8 on unless you complete five or more monthly transactions, including direct deposit, debit card purchases, bill payments, check payments and ATM cash withdrawals.
Wachovia customers still get to hold on to their free checking accounts, but they will be fully integrated with the bank's other fees -- including $2 charges to receive images of cancelled checks and $10 fees for using your savings as overdraft protection.
While you can find ways around monthly fees at most of the nation's biggest banks, many smaller community banks, credit unions and online banks offer free checking without the strings attached. McBride also recommended checking out online banks such as Charles Schwabb, ING Direct, Flagstar Direct and EverBank for free checking accounts and said that the 39 of the 50 largest credit unions offer free checking.