Free Checking No More: Thanks, Dodd–Frank!

Free checking accounts, once considered common, are becoming increasingly rare as the enormous costs of new regulations hit banks’ bottom lines.

According to the just released 2012 Checking Survey by Bankrate, Inc., a publisher of financial information, only 39 percent of banks continue to offer free checking accounts, a sharp decline from the 76 percent of banks that offered free checking in 2009—before enactment of the massive Dodd–Frank financial regulation statute.

The Bankrate study, which analyzed about 500 checking accounts, also found that the average minimum balance required to avoid a monthly fee rose 23 percent in the past year, to $723.02 for non-interest-bearing accounts.

The jump in service fees is not surprising, as new regulations cost banks billions of dollars annually. The regulatory culprits include restrictions on overdraft fees and price controls on the fees that banks are allowed to charge retailers to process debit card transactions. The onslaught of hundreds of other Dodd–Frank regulations is also taking a toll. These costs have to be made up somehow.

According to Bankrate, almost every checking fee in the survey has increased, with some rising 25 percent or more. For interest-bearing checking accounts, the average minimum balance necessary to avoid fees has doubled in the past two years to $6,117.80, while the average monthly service fee has risen to $14.75.

Consumer overdraft charges and fees for using out-of-network automated teller machines have also increased. Use of an out-of-network ATM now costs an average of $4.07 per transaction.

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Although sold as “consumer-friendly,” the Dodd–Frank statute and other regulations on financial services are actually thinning the wallets of consumers. The loss of free checking is just one more of the many problems of this ill-conceived regulation.

Kaitlyn Evans is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit:

Source material can be found at this site.

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