Attention Wells Fargo customers: get ready to bid adieu to free checking. According to Bloomberg, Wells Fargo & Co. ended free checking in six eastern states in March of 2012. And more states are to follow as the bank tries to make up for lost revenue due to new financial rules.
Moving forward, customers in New York, New Jersey, Connecticut, Georgia, Delaware and Pennsylvania must pay a $7 monthly fee for a basic checking account if they receive paper statements, and $5 if they select electronic statements. Wells Fargo will waive the fee for people who direct deposit more than $500 each month or maintain a $1,500 balance. But that’s not so comforting for customers who aren’t used to jumping through hoops to earn something that used to be a given.
We’d bet it’s been especially frustrating for Wachovia customers who have weathered the acquisition transition only to find it’s now raising fees. Wells Fargo purchased Wachovia in 2008, and just finished rebranding those branches in October of 2011. They then eliminated free checking in July 2010 for new customers, followed by a slow rollout of fees to existing account holders.
Why Banks Are Pushing Their Customers’ Limits
Squeezed by regulations under the Dodd-Frank financial reform law and hampered by slow growth during the recession, banks are looking to find new ways to wring fees from customers. So customers should continue to expect higher minimum balance requirements, inventive new fees and an ongoing push to increase customers' credit card spending in 2012.
You can blame it all on the Dodd-Frank Act and the Credit Card Act, which both actually set out to rein in aggressive fee and banking practices that were hurting consumers. Banks claim that the new laws are taking a big bite out of profits, and they have to make up for it somewhere.
But according to the Huffington Post, the banks haven’t lost nearly as much as expected. In 2007, the percentage of revenue that came from fees was more than 40 percent. In 2011, that percentage dropped just 4 points to 36 percent.
From this angle, it’s hard to see how ticking off millions of customers is worth a few extra bucks. Just ask Bank of America how that whole debit card fee thing worked out. But it sounds like the fees are on the rise for now—and freebies are out.
SOURCES:
http://www.bloomberg.com/news/2012-03-08/wells-fargo-ends-free-checking-with-7-fee-added-in-six-more-u-s-states.html
http://moneyland.time.com/2011/10/03/bank-of-america-backlash-consumers-react-to-debit-card-fee/
http://www.huffingtonpost.com/2011/12/29/bank-fees-2012-increase-prediction_n_1174635.html
PHOTO CREDIT:
http://commons.wikimedia.org/wiki/File:Mad_dog.jpg
