Banks earn billions in overdraft fees, money that helps pay for free checking.
A chunk of that revenue will disappear when some consumers elect not to sign up for the opportunity to spend more than they have. This week, Bank of America said that $160 million in overdraft fee revenue had already disappeared, because of changes it made in its policies ahead of the new federal rules.
When that money evaporates as other banks comply with the regulations, they’re going to try to make it up some other way, particularly if they’re paying more taxes to the federal government and have fewer ways to trade their way to outsize profits.
So might banks try to do away with free checking entirely?….
Ok, a morning quiz. Fill in the blank: the average customer paid ___ overdraft or other insufficient-fund charges in 2009. What number do you think? Guess before looking and read it all–KSH.
Well, perhaps it is time to return to cash…you know, that legal tender for all debts, public and private, and stop paying that 0.9-3.25% “swipe fee” (interchange rates) on cards, outrageous ATM charges, and Check Service fees. Let’s return to cash and stop paying so much to use our own money.