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The Free Checking Lie

Frequent Contributor

The Free Checking Lie

Forbes article:

https://www.forbes.com/sites/ronshevlin/2019/01/28/its-time-to-kill-free-checking-accounts/
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Current Score: TU 647 - EX 659 - EQ 677 (f9)
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Message 1 of 16
15 REPLIES
New Contributor

Re: The Free Checking Lie

This is so true! My bank offers the "FREE CHECKING ACCT", and has minor fees but I have seen the tatic.

Message 2 of 16
Regular Contributor

Re: The Free Checking Lie

Free checking isn’t a lie.  Free checking is free for a consumer, but still profitable for the bank because of potential added fees, deposit holds or restrictions and funds made available to make loans.  Not sure how this article contributes anything of interest.  

 

Most people benefit from no minimum checking accounts.  The high end can benefit if you have significant assets at a single institution especially at the Private banking levels.

 

Former President Reagan for instance had private banking with Wells Fargo.  I bet he likely started out with an actors credit union account or something similar at the beginning.  

Message 3 of 16
Community Leader
Super Contributor

Re: The Free Checking Lie

I agree that the article seems a bit strange.  A parallel article could probably be written exposing the Big Lie of cost-free credit cards.  It's doubtless true that most people pay interest or late fees or whatever on their no annual fee cards.  But they don't have to.  That's just bad financial planning -- not the result of the vicious scheming Illuminati of the Big Banks and their Big Lies.

 

I like my Discover checking account and its free paper checks and no minimum balance policy.  I haven't paid a dime to Discover in fees of any kind.  Not ever.

 

In general, banks pay me money to bank with them.  I get offered big bonuses for opening savings and checking accounts (as well as cards).  I am not terribly smart, or privy to weird esoteric knowledge.  It's something almost anyone can do.

Message 4 of 16
Regular Contributor

Re: The Free Checking Lie

I was looking into Wells Fargo Portfolio checking but it requires 25,000 min and there isn’t any real benefits for me and the dedicated banking team feature is the only part which seems okay but what can they do above and beyond the other banking teams?  Wells Fargo Greenhouse seems like the better deal with no minimum balance and branch access.  One can try to get more advanced banking services direct from tellers but I don’t know if this is possible.

 

I am not at private banking level yet.  

 

Message 5 of 16
Frequent Contributor

Re: The Free Checking Lie

I think the point of the article is not to take what banks say at face value.
Is something really free if it has so many fees that it's not?
And, yes, there are some really great non-brick and mortar banks that ARE essentially free.
Starting Score: TU 631 - EX 641 - EQ 669
Current Score: TU 647 - EX 659 - EQ 677 (f9)
Goal Score: 750


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Message 6 of 16
Moderator Emeritus

Re: The Free Checking Lie

I haven't paid a fee to Chase since I first opened the account in 2011.

 

There are clearly laid out structures and notices as to how to not incur fees, isn't rocket science Smiley Happy.

 




        
Message 7 of 16
Super Contributor

Re: The Free Checking Lie


@Revelate wrote:

I haven't paid a fee to Chase since I first opened the account in 2011.

 

There are clearly laid out structures and notices as to how to not incur fees, isn't rocket science Smiley Happy.

 


This hits the nail on the head. Using a big bank for years now and have been fee less for years. Pay attention and a person can work the structure (system) and I do!

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Message 8 of 16
Established Contributor

Re: The Free Checking Lie

Nothing is ever truly free though, right? In this case it is free so long as you abide by the rules governing the account. Which means no over drafting, keeping a minimum balance or making certain number of Direct deposits per month. 

 

While most people think free checking is aimed at lower level income earners, it's really only beneficial to those with higher income. 

Because most people on a budget will always overdraft at some point, either by a missed paycheck or unexpected expense. 

FDIC Data Shows that Banks Collected $11.45 Billion in Overdraft Fees in 2017, and Forbes reported that Banks collected over $34 Billion in overdraft fees in 2018. This tells me that Banks are litterally surviving on the backs of poor people, to counteract all the interest paid to the rich people's Money Market accounts etc.
Message 9 of 16
Valued Contributor

Re: The Free Checking Lie


@Janus wrote:

Nothing is ever truly free though, right? In this case it is free so long as you abide by the rules governing the account. Which means no over drafting, keeping a minimum balance or making certain number of Direct deposits per month. 

 

While most people think free checking is aimed at lower level income earners, it's really only beneficial to those with higher income. 

Because most people on a budget will always overdraft at some point, either by a missed paycheck or unexpected expense. 

FDIC Data Shows that Banks Collected $11.45 Billion in Overdraft Fees in 2017, and Forbes reported that Banks collected over $34 Billion in overdraft fees in 2018. This tells me that Banks are litterally surviving on the backs of poor people, to counteract all the interest paid to the rich people's Money Market accounts etc.

There's really no excuse for overdrafting. It's simple: if expense if greater than balance, do not pay with check or debit. As others have said, it's not rocket science.

 

As for paying interest, fees aren't going to that. They're still making more loaning out the money than they're paying in interest.


TU FICO 8: 774 (1/19) — Ex FICO 8: 751 (2/19)
Message 10 of 16