The other day I was standing in line at the grocery store in the 15 items or less line and it was moving very slowly. I assumed it was just my impatience (as I am from New York, and we New Yorkers have “that” reputation) until the lady in front of me said “geeeeez, he’s writing a check!” I looked ahead and sure enough this guy was writing a check for what seemed like, maybe 6 items. My first thought was who writes a check anymore at a grocery store¬†and more to the point who even has checks? (I do everything online) But as I discovered in my research on checking accounts, the era of free checking accounts may be over and that guy at the grocery store may have to use his debit card next time….

If you struggle financially¬†and have to write or cash checks , life may get a bit rougher. Bank of America stopped offering its last free checking account that does not require a minimum balance, prompting a loud chorus of “boos and hisses” from customers. People who had the free accounts have now been shifted to ones that charge $12 a month, unless the customer has a minimum balance of $1500 or a monthly direct deposit of $250 or more. The timing of the bank’s decision, right on the heels of a massive Republican-backed corporate tax cut was one reason for the outrage (especially since this change will predominately affect poorer Americans).

Roughly 7 percent of the country doesn’t have a banking account, while one-fifth doesn’t have access to banking tools such as debit or credit cards. Raising fees on basic services will only push such people toward predatory lenders and even riskier financial institutions that exacerbate poverty.

Free checking is basically a thing of the past, and one major reason: The increased federal scrutiny of overdraft fees. Americans pay roughly $14 billion in overdraft fees annually, and federal regulators have in recent years begun to crack down on banks’ shadier practices, such as transaction reordering, which sorts withdrawals from highest to lowest in order to increase the likelihood of one or more overdrafts on a low-balance account. Fees generated by those overdraft policies were a big part of the free checking model. So as the revenue stream has dried up, it’s become more likely that customers have to pay for their accounts. This shift should be a vivid reminder that we shouldn’t expect banks to serve anyone but their shareholders.

Banks exist to generate profit, and households that struggle to maintain a minimum balance in their checking account are usually not very profitable customers, unless they are paying through the nose for overdrawing on their accounts.

Free checking accounts do still exist, if you look hard enough. Most major banks will waive their monthly fees if you have a regular paycheck deposited directly. If that’s not possible for you, internet-only banks are your best option. The venture -funded online bank Aspiration, for instance, has a no-fee checking account with no minimum balance, no direct deposit requirements, and no ATM fees; the trade off is that there are no brick-and-mortar branches if you want face-to-face banking assistance. Going forward, it will be interesting to see if this online option takes off. In the meantime consumers still have some choices, although they may seem limited.

So when I got to the cashier I pulled out my wallet and gave the gal a $20.00 bill and I swear I heard someone behind me say “what is that?” At Bourke Accounting we hear lots of unusual stories, maybe because we have been around a while and seen the change in the economy and the overall structure of life. Whatever your financial issues are, we are hear to help. Give us a call at 502-451-8773 or stop by for a visit. See you soon!