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A Wall Street Journal article says the banking industry is about to close out the era of free checking accounts.
Because of new regulatory restrictions that will limit fees on overdraft charges and credit cards, Bank of America (NYSE: BAC ) and other institutions are looking for ways to make up for billions in lost revenue. Fifth Third Bancorp (Nasdaq: FITB ) is one step ahead of many other major banks in this regard, having already dropped free checking last year.
"More than half of all checking accounts are currently unprofitable, according to a report issued last month by Celent, a unit of Marsh & McLennan Cos.," says the Journal. "It costs most banks between $250 and $300 a year to maintain one of the roughly 200 million checking accounts, according to industry estimates."
There's no such thing as a free lunch, and free checking wasn't really free anyway. Customers wishing to keep the facade of "free checking" will have to maintain a set minimum balance "or frequently use other banking services, such as credit and debit cards, automated teller machines and online accounts."
I suppose a free toaster is now out of the question as well.