When Congress passed regulations on the financial industry, banks warned that the restrictions would lose them revenue, inevitably causing them to raise rates and fees to recover it. Banks have proved many times they weren’t bluffing, and are experimenting with new fee models to replace the lost revenue.
Free checking was a nice gift banks used to attract customers in the past, and the banks used them for relationship building. Essentially, they hoped they could cross market to their checking account customers and offer them loans, mortgages, mutual funds, and credit cards. However, with the loss of many lines of revenue, the free checking accounts are one of the first products the banks are targeting to revamp.
At Bank of America (NYSE: BAC), there are testing a fee system that divides customers into four groups and charges monthly fees based on how much money and how many accounts a customer has with the bank. The fees could range from $6 to $25 a month, but customers can avoid the fees if they satisfy criteria like having multiple accounts with the bank, credit cards, or meet a minimum deposit level.
Citigroup (NYSE: C) started charging their customers monthly maintenance fees, which can range anywhere from $8 to $20 depending on transactions volumes. Similarly, JP Morgan Chase (NYSE: JPM) will implement a monthly fee program beginning February 8. Wells Fargo (NYSE: WFC) will launch their monthly maintenance fee program on February 3, charging customers a $5 monthly maintenance fee and a $6.95 monthly online bill pay fee.
Amid the difficult economic environment, consumers will surely be outraged by this. Ultimately, the Dodd Frank financial regulatory reform does not seem to be hurting the banks as much as it is the consumers. The banks have collectively pushed new costs onto consumers to recoup revenue lost from now defunct lines of business. This will likely lead to further vitriol and unrest amongst the banking public.
