There are no shortage of articles out there talking about the end of free checking accounts.  They crop up every couple of weeks in conjunction with a new debit card fee, or a new regulation, or something.  They are crappy pieces of journalism that don’t add any value to a conversation.  It’s like every week the news reports on mortgage application volume or average interest rates and make a snap judgment about housing.  That report comes out EVERY WEEK and can be quite volatile.  A given week’s report means nothing.

Digressions aside, let me get back to what your checking, saving, and CD accounts will look like for the next couple of years.

First and foremost, banks kind of don’t want your deposits right now.  They aren’t making any money off of them because the Fed drove down interest rates so much there isn’t a loan out there really worth giving.  But the Fed continues to drive down rates, which will largely benefit the government.  Banks only want your deposits if they can actually do something with that cash.  So it’s true they might try to get you to transfer that cash into a brokerage account or something, but it’s a race to the bottom right now in terms of interest rates on accounts.

What banks do want you doing is making transactions.  Rule changes have made swiping your debit card a lot less profitable than it once was so there goes another revenue source.  And we all know that most of the profitable fees charged to you are long gone.

So they can’t make any money on interest rates and can’t make it on the fees they used to charge you and merchants, they are going to make up for it somewhere.  So if you weren’t aware banks used to give you all kinds of perks that cost them money to give you.  Debit cards cost money, processing checks are expensive, even talking to someone in person or on the phone is significantly more expensive than doing transactions online.  So banks are going to charge you for all these services they used to give away for free.

Get used to it.  This is the near-term future for everyone.  You might have to pay the bank just to keep your money safe for you.  Sounds like a novel concept.  Banks used to pay you for the privilege of holding your money.  In a short matter of time you’re going to pay them.  This is what financial reform bought you.  Banks used to make money on borrowers and irresponsible customers who didn’t keep enough money in their accounts.  Responsible customers didn’t get charged for anything.  Now they will.

Don’t like Well Fargo’s new debit card fee?  Switch to Citi and they’ll soon have it too.  Go to a regional bank and they’ll be doing the same.  Think you’re safe at a credit union?  Just wait, they always follow suit behind banks and just charge a little less.

Until banks can make money on interest again, this is everyone’s future.  If banks can’t lend your cash then they are going to charge you to keep it with them.  Get over it and please tell the media you get it now so they’ll stop publishing the same story every week.

Be Sociable, Share!
categories: banking, business, government