So um, what obligation do banks have to offer people free stuff? As a part owner of a bank I can guarantee that checking accounts and debit cards, especially for smaller banks, are a losing proposition for the bank no matter what fees we charge. Checking accounts are mostly a customer loyalty sales pitch for loans and stuff. People forget that free checking is largely a development of the last 30 years.
The way the old system was set up was that responsible customers basically got everything for free, and irresponsible customers got hit with fees. Now the system is going to be more "egalitarian." Everyone pays the same no matter the cost to maintain their individual account.
Minimum balances to avoid fees actually make a lot of sense. If you run a low balance on a checking account and have no loans with the bank, they are losing money on you every time you use your account and even more money every time you require the services of a teller or account representative. Moreover, there are numerous regulations regarding financial privacy, data retention, etc. that have very large costs to comply with. Weeks of mandatory training, data storage, etc. So I can charge you $15 a month to cover their costs, or I can require you to maintain $1500 in your account so I can turn around and loan that money to someone else and make money off your checking account.
If you have a loan or mortgage at a bank, I highly recommend you do all of your banking there. This will make you a preferred customer and most banks will wave all recurring fees for such customers. Personally, I have a mortgage with Wells Fargo and such I get free checking and debit, no limit # of withdrawal savings accounts, and free securities trading through their brokerage.
It might have changed in the 10 years since I actively worked at a bank, but bounced checks, whether the bank pays them or just returns them, carried huge costs to all the banks. Bank 1 that had the depositors of the bad check's account would have to manually reduce the amount of the deposit and physically return the check to the depositor as Insufficient Funds. The Federal Reserve would have to serve as the clearinghouse from the transfer of the NSF check from bank 2 to bank 1. Bank 2 would have to pull the check out of their pile and mark it NSF, the send it back the the Fed.
The majority of bank employees are devoted to maintenance of checking accounts. In my bank, we had 5 tellers, 4 bookkeepers, 2 loan officers, and 4 misc employees doing stuff like compliance, credit checks, and advanced customer service. Without checking accounts you could easily have gotten away with 2 tellers, 1 bookkeeper, and the rest unchanged.
So again, why should banks take on all these costs for free when most of their debit/checking customers will not provide them with any revenue?
