NEW YORK — Free checking as we know it is ending.
The days when someone could walk into a bank branch and open an account with no charges and no strings attached appear to be over. Now the banks have requirements: keep a high balance, use direct deposit, or use a debit card several times a month.
One new account at Bank of America charges $8.95 a month for banking with a teller or receiving a paper statement.
Almost all the largest U.S. banks are either making free checking much more difficult to get or are expected to do so soon, with fees on even basic-banking services.
It's happening because a group of laws enacted in the last year, including the financial overhaul package, have led to an acute shrinking of revenue for the banks. So they are scraping together money however they can.
Bank of America, which does business with half the households in America, announced a dramatic shift Tuesday in its practices.
One change: Free checking, a mainstay of U.S. banking, will be nearly unheard of.
“I've seen more regulation in the last 30 months than in the last 30 years,” Robert Hammer, chief executive officer of RK Hammer, a bank advisory firm, said. “The bottom line for banks is shifting enormously, swiftly, and deeply, and they're not going to sit by twiddling their thumbs. They're going to change.”
In the last year, lawmakers in Washington have passed a range of laws aimed at protecting bank customers from harsh fees such as the $35 charged to some Bank of America customers who overdrew their accounts by buying something small such as a latte.
These and other fees were extremely lucrative.
According to financial services firm Sandler O'Neill, they made up 12 percent of Bank of America's revenue. The bank Tuesday, when it reported its quarterly earnings, took a $10.4 billion charge because the new regulations limit fees the bank can collect when retailers accept debit cards.
To make up for lost fees, the bank started thinking of new products. In August, it introduced an “eBanking” account that offered a free checking account to customers who banked online.
The catch: If they opt for paper statements or want access to tellers for basic transactions they would be charged a monthly fee of $8.95.
“We are now in an era where consumers will be buying products from banks, even if it's a checking account,” said Brian Riley, senior research director for bank-card practice at consultant TowerGroup. He noted that several banks have started charging $7.50 for paper statements.
“Economic research firm Moebs Services says free checking usage has been steadily rising in recent years before falling this year.
Last year 81.5 percent of U.S. banking customers had free checking, but that fell to 72.5 percent this year.