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Bank of America recently announced that it plans to add fees to checking accounts, which some say is the beginning of the end for 'free checking' in the U.S.
According to Jon Bartholomew, a policy advocate for Oregon State Public Interest Research Group (OSPIRG), other banks are watching each other to see what works and what doesn't work with the price changes.
"If people leave Bank of America in droves, that will influence the other banks to not do the same thing. A lot of these big national banks are being pressured by shareholders who have come to expect a high level of returns. However, that’s an unsustainable and irrational thing to expect," said Bartholomew.
Free checking is something that is relatively new in the banking industry.
"Back in the 90s, you couldn’t find 'free checking' anywhere unless you had thousands of dollars to put into savings. So this is nothing new. It’s just a bit more honest about how the banks are making their money."
Bartholomew thinks small community banks and credit unions in Oregon have better fee policies and interest rates.
"They haven’t been negatively impacted by any rule changes. They have been operating in a much more consumer-friendly way, and doing just fine for the most part," he said.
The changes are not necessarily bad for consumers, because a monthly charge is better than the risk of multiple overdraft fees.
Bartholomew concurs, "Charging these fees on the front end in the open is better for consumers than locking them into back-end fees that are structured to trick them into paying way more than $6 a month for a checking account."
OSPIRG has more information online at http://bit.ly/IDAmX.
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