It seems another vestige of the credit boom, banking that is free for users, is following its plastic buddies and tightening up as banks seek new ways to wring profit out of a strapped pool of consumers.
Most Americans have grown accustomed to not paying- or not paying much- for their checking accounts. But the availability of a free checking accounts is diminishing, banking experts warn, and you could soon find yourself slapped with hefty fees if you don’t do a large volume of banking. As is often the case with bank profits, the money stands to be made from those who can least afford it, and many people could be added to the ranks of the “underbanked” (people who cannot afford to use traditional banks to manage their money, and are forced to resort to expensive check cashing outlets and payday loan centers) if the trend continues.
New Jersey was one of the states with regulations ensuring checking accounts remain reasonably affordable, but consumer advocates say that loopholes have enabled banks to wriggle out of even this minimal protection. (For instance, the monthly rate regulation doesn’t cover compounding overdraft fees, which have been known to wipe out entire balances for struggling folks.) Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, commented :
“I think (fee increases) will increase the number of unbanked people we have in New Jersey… This is not the group of people that they should be looking to make money from.”
The fee hikes are in part a banking industry response to the caps placed on other sorts of fees mandated by federal law- caps which will go into effect on October 1st. As of now, only 45% of checking accounts are free, down from 76% in 2009.
