While I encountered numerous online articles about this move, it was one sentence in the article by JD Malone of Allentown, Pennsylvania’s newspaper The Morning Call that got my attention.
The sentence reads: “Wells Fargo told Reuters that it believes 80% of customers will avoid the fee altogether and that it is offering a $2 discount on the fee if customers sign up for paperless statements.”
Avoiding the fee will require these former free checking customers to either maintain a $1,500 minimum daily balance or have more than $500 in direct deposits each month.
If you are, or were, a Wells Fargo free checking customer, by now you’ve been treated to over two years of “poor me” news articles about the big banks’ need for additional fee income for a variety of reasons, including:
- The banks have been losing money offering free checking.
- The loss of overdraft fee income due to legislative changes.
- The loss of debit card interchange fee income due to legislative changes.
- The estimated cost of complying with new legislation – particularly Dodd-Frank.
- The costs of providing mobile banking services.
And I’m sure other reasons have been provided that I’ve missed.
So, when Wells Fargo sends you a notice advising you that your free checking account is being replaced by the new “Essentials” checking account with its $7 monthly fee, you reason the purpose of the fee is to replace the billions of dollars the bank has been losing for the past couple of years or longer.
Unfortunately, this reasoning seems to be contradicted by the statement above about the bank believing 80% of its Essentials Checking customers will avoid paying the fee.
This begs the question as to the bank’s real motivation behind implementing the $7 monthly fee on the free checking replacement account.