On the other hand, if you believe a majority of the media stories on the future of the free checking account, you would already have come to the conclusion that your valued free checking account is going the way of the land-line phone, the cassette tape, vinyl records, and the dinosaur.
It will soon join the savings passbook and free checkbook cover in the museum of consumer banking antiquities.
Don’t believe it. These media stories are simply missing the bigger picture. The writers behind these stories have bought into the big lie being told by spokespersons working for the four huge mega-banks. These banks quickly made the decision to put fee income ahead of the needs of their checking customers.
Unfortunately, a handful of bankers managing smaller banks have taken the bait and are eliminating free checking at their banks. Perhaps they’ve already forgotten that they don’t enjoy the “too big to fail status” of the mega-banks.
Contributing to this free checking doom and gloom scenario are a handful of consultants to the financial services industry with a vested interest in the demise of free checking. You see, these door to door peddlers are calling on banks and credit unions – trying to sell them an expensive consulting contract to realign their checking account portfolios. To gain an audience, they needed a hook.
The free checking is dead storyline is the hook being used by these consultants to get an audience with the CEO and his or her marketing minions. It’s a scare tactic that is being used successfully on the lesser informed bankers as it relates to checking account profitability.
The nascent free checking is going away movement quickly caught fire as a result of the recent deluge of legislation coming out of Washington that is having a major impact on consumer banking. First it was onerous credit card legislation. This was quickly followed by the overdraft opt-in legislation with its dire predictions about the loss of fee income. Next came the dreaded 2,200+-page Dodd-Frank Wall Street Reform and Consumer Protection Act giving legislators an almost unlimited hunting license to meddle in the consumer banking business.
Almost immediately bankers were warned that the government would be looking to drastically reduce interchange fees on debit card transactions at the point-of-sale.
It’s this growing assault on fee income that has the mega-banks scrambling to dump free checking while adding more fees on existing accounts and replacing free checking with new fee-based accounts.
Free Checking Roots
Oddly, the free checking movement has its roots in the smaller community banks and credit unions located throughout the country, not the big banks. In fact, the mega-banks were slow to embrace free checking. They did so only after realizing that free checking wasn’t going away. So, in reality, their hearts were never in free checking. To them, free checking was simply a defensive move. The recent assault on fee income provided them with the perfect reason for dumping free checking.
Because of their immense size, commanding market share, negative publicity over their role in the recent economic downturn, use of TARP funds to survive, and now being the face of the foreclosure crisis, their collective decision to dump free checking quickly grabbed the attention of the media.
It’s easy for the media types to quickly jump to the conclusion that if the mega-banks drop free checking then all the other banks and credit unions will have to follow along – as if these four big banks were somehow the arbiters of checking account products.
By dumping free checking, it opens them to renewed checking competition from the smaller community banks and credit unions. While they would never admit it publicly, you can bet the folks running the mega-banks understand their vulnerability should the free checking account retain its support among the legion of community banks and credit unions operating in the same market areas as the mega-bank branches.
Don’t let the big mega-banks kill the free checking account.
The purpose of this free checking website is to provide community bankers, credit union management, and financial media writers a gateway to as much information as possible on the rationale for retaining and aggressively marketing free checking.
Millions of hard-working Americans are depending on you to continue supporting the free checking account.