Two weeks ago, Wells Fargo said it will impose a $7 monthly account fee in six states, including Connecticut, effectively ending free checking. Just days earlier, it was disclosed that BofA was testing new fees in three states as a prelude to imposing fees on basic checking accounts.
Kim Reid of Hartford, who opened a Wells Fargo account about a year ago, would be charged the new fee — and Reid said it would make her think twice about keeping her account at the bank.
“I don’t think they should charge you,” Reid said. “They already have your account and your money.”
Reid isn’t against all fees. If you bounce a check, you should get charged a penalty. You’ve spent money that you don’t have. But a fee for just having an account, “that’s just wrong.”
But that mindset is changing, they say, especially after last fall’s controversy over the debit card fee that reached as high as the White House.
“What happened last fall after the president talked about the truly unfair, $5 debit card fee, there was a real change in consumer behavior,” Ed Mierzwinski, the consumer program director at the U.S. Public Interest Research Group in Washington, said. “Before the Bank of America mess, the banks’ conventional wisdom was they could get away with raising fees, not anymore.”
One customer-service expert believes that Wells will lose thousands of customers over the decision to charge the $7 fee.
“When you tell young people and those without money you want to increase the cost of using Wells Fargo $84 a year JUST to use your checking account, it is time to switch banks,” John Tschohl, president of the Service Quality Institute, which develops customer service training programs, said in an email to The Courant.
The decision by the large national banks to impose the checking account fee — while rekindling the long-running controversy over new and increasing fees — does not come as much of a surprise to some banking experts.
The challenge for banks is to “find a way to make [customers] more profitable without alienating them.”
Banks may be less willing to back down on checking fees, unlike when BofA scrapped the debit card fee. The argument with the debit card was that consumers were paying just to get their money. With checking, the bank can argue that it is processing checks and other transactions for the customer, Porter said.
The trick, Porter said, is persuading the customer that there is enough value being provided to justify the fee.
That value might be in the sprawling branch and ATM networks maintained by the big banks, although they existed before without the fee.