Is Dropping Free Checking a PR Blunder for Wells Fargo?


Remember when Forrest Gump reminded us that “stupid is as stupid does?”

When Bank of America and Chase dropped free checking for existing customers, they did it all at once. In this manner, the negative publicity and resulting media stories came and went within a day or two.

So, why would senior management at Wells Fargo bank make the decision to drop free checking for its customers over a period of at least two years?

This means that each time it announces dropping free checking for customers in certain states, it must endure a flurry of negative media stories for a couple of day. On Thursday, March 08, 2012, stories flooded the Internet announcing that Wells was eliminating the free checking accounts for customers living in Georgia, New Jersey, Delaware, Connecticut, New York, and Pennsylvania.

In the most recent articles it was mentioned that Well Fargo eliminated free checking for customers in 24 Western states during 2011. And now, it’s working its way across the country into the Eastern states.

It makes you wonder why the bank didn’t simply eliminate free checking at the same time in every state where it has customers. This would seem to be the best approach from a PR perspective. Get it over with and move on.

In the Wells Fargo approach, it is continuously reminding both customers and non-customers alike that the bank is eliminating its free checking account – replacing it with the “Essentials” checking account. You simply got to love that name – Essentials.

wachovia essential checking account

I’ve taken the time to look up the word “essential” in the dictionary. According to Webster’s Ninth New Collegiate Dictionary, the word “essential” means: “of the utmost importance: Basic, indispensable, necessary.” I’m sure most of the bank’s former free checking customers would argue that their new “Essentials” account is much less essential than FREE CHECKING which better qualifies as an essential account.

Free checking was of the utmost importance to them. It was an indispensable, basic checking account free of a minimum balance requirement and free of a monthly service fee.

Now, these same customers will have an “Essential” checking account that burdens them with a $7 monthly service fee unless they maintain a minimum daily balance of $1,500 or arrange a monthly direct deposit of at least $500 or more. Oh, and let’s not forget a $2 fee discount for agreeing to replace paper statements with online statements.

Now here’s the ultimate irony.

For the past few years we’ve heard over and over from the four mega-banks – Chase, Citibank, Wells Fargo, and Bank of America – that they must eliminate free checking as they are losing money providing this account. They need to start charging for checking accounts to replace the lost fee income from recent overdraft legislation, the rollback in debit card interchange, and the anticipated compliance costs of the Dodd-Frank law.

Okay, so Wells Fargo replaces Free Checking with an Essentials account with a $7 monthly fee.

Yet, in one online article posted to the Internet on Thursday, March 08, 2012, it was stated that the bank expects 80% of its customers to waive the monthly fee by keeping a minimum balance and taking other actions.


If 80% of these formerly free checking customers won’t be paying the $5 or $7 monthly fee, then the “we need more fee revenue argument” appears to be false. It’s a red herring.

When I read media stories like those being written about Wells Fargo’s latest move with free checking it makes me wonder if anyone really looks at the big picture before making decisions and speaking to the media?

Here we have a story about an “Essentials” account replacing the ultimate “Essentials” account in order to collect more fee income that won’t actually be collected as 80% of the customers will find a way to avoid the fee.

It makes you wonder how these big banks got so big in the first place.


The Morning Call


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