Free Checking Becomes "Easy" Money for US Bank

The concept of "free checking" has always been somewhat fraught with inaccuracies. Yes, you may have an account that doesn't have a monthly fee, but if you review your annual statements, you may discover that you have, indeed, paid for this, whether it's an amazingly high cost for checks (does it really cost $30 to print six paper booklets?); a number of $35 overdraft fees for a transaction that may have cost the bank a few cents or fractions thereof; and those "convenience" fees for using other banks' ATMs.

For as many years as anyone can remember, most U.S. banks have earned the vast majority of their money from fees to consumers. And for years, US Bank was behind the curve, only scoring its fees from the traditional punitive sources, with nothing regular it could count on.

But now the bank is switching to "Easy Checking" as of May 15, as The Consumerist reports. But even this "easy" service can get confusing: It's $6.95 per month for the regular easy service, $8.95 if you refuse online statements, and free if you keep a minimum balance of $1,500 or make $500 in direct deposits each month. This isn't much different from the basic offerings from other banks, such as Bank of America and Wells Fargo, which gave up free checking ages ago.U.S. Bank hinted grimly that free checking was on its way out in the company's January 2011 earnings conference call with analysts. CEO Richard Davis sounded downright grumpy during the call. "We're not going to be a late follower anymore; we're going to be right in the game...we no longer have the luxury of waiting," Davis told Wall Street.

In the game of consumer checking accounts, it seems the value is on guaranteed money flowing in and out. Along with the standard minimum-balance requirements and the industry's long-held preference for direct-deposit paychecks or other regular payments, the next golden child of regularity seems to be the savings account transfer. (US Bank is also offering a "silver package" that provides no-monthly-fee checking if you automatically transfer at least $25 each month into a savings account.)

Banks don't say how this compensates for predictable monthly income, except that keeping money in a savings account, even if it's just overnight, does impact the bank's overall reserve requirement (how much of its money it must keep actually "on the premises" for its customers to access, not lending it out), and it could conceivably increase interest income and decrease interbank lending costs.

Either way, most bank account managers sell this to consumers as an awesome loophole: If you set up the automatic savings transfer on the 20th, you can transfer it back on the 21st, and you've done your duty. You can also change the date of the transfer at will.

If you act fast, you can still sign up for free checking online Saturday; U.S. Bank doesn't trumpet the change, although according to this document, existing free checking account holders will be "updated" in June or July, depending on the banking laws in your state.

In the final analysis, "Easy" is simply joining a heady assortment of other "customer friendly" checking accounts, like "Value," "Express," "Workplace," "Balance," "Interest," "Interest Plus," "Relationship" and "Exclusive."

But let's face it: What "Easy Checking" and all its related siblings really are, is just easy money for the big banks, who are getting their hands slapped a little from government officials because of all the candy they're trying to steal from consumers, the proverbial "baby" in this scenario. "Easy" checking is easy for everyone...but the service's customers.
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