Free Checking Is Tougher to Find

A raft of new rules designed to protect bank customers and reduce fees charged by banks has cost the industry billions of dollars in fee-based revenue. How will banks recoup those losses? "They will be re-priced into the business," says Mike Cavanagh, of JPMorgan Chase.

Translation: Consumers will pay higher prices for basic banking services. Among the first services to be affected will be free checking. Free checking was subsidized by customers who paid hefty fees for overdraft protection. Now that banks aren't permitted to enroll customers in overdraft plans automatically, the subsidy will be reduced and banks may charge all customers higher prices for all checking accounts.

That doesn't mean free checking will disappear. But more banks will impose requirements to qualify for an account or fees for specific services. Fifth Third Bank has discontinued free checking for new accounts and now charges $7.50 to $15 a month, depending on the package you select. The fee is waived if you arrange for direct deposit or a regular, automatic transfer from a savings account. Wells Fargo replaced its free checking accounts for new customers with Value Checking, which costs $5 a month unless you meet certain conditions.

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Free high-interest checking accounts paying up to 4.25% are available at 750 community banks and credit unions if you meet their criteria (go to www.checkingfinder.com for a partial list). Most require that you use your debit card ten to 15 times a month, receive your monthly statement by e-mail, and have one direct deposit, one automatic payment or one bill paid online each month. If you don't qualify, check with local community banks or credit unions, which may offer free non-interest-bearing accounts (go to www.culookup.com or www.findacreditunion.com to search for a credit union, or to www.icba.org for a listing of community banks).