Which is what JPMorgan Chase did in an interview with American Banker about its plans to impose new checking account fees.
“We don’t want to raise fees on our customers,” a spokesman for JPMorgan Chase said Wednesday, “but unfortunately regulation is forcing us to do it, and as a result some customers may end up unbanked.” He declined to discuss how many customers would be subject to a monthly fee as a result of the changes.
The background: banks’ fee income soared in recent years as the financial institutions quietly changed their policies on over-limit transactions, particularly those made with debit cards. Instead of declining a transaction if you didn’t have the money in your account, the banks started approving them so they could charge you $30 to $35 a pop. Many banks also reordered transactions before processing them to ensure the largest ones would go through first, draining the account more quickly so subsequent transactions could generate more fees.
Banks typically imposed these “bounce protection” or “courtesy overdraft” program without asking customers’ permission, and some banks wouldn’t allow you to turn them off.
Regulators finally stepped in, requiring banks to get customers’ permission to enroll them in bounce protection. To no one’s surprise, most customers declined.
But banks had gotten hooked on the easy money, and now they’re scrambling to find other ways to ding us to get that cash flow rolling again. The bank spokesman is repeated the industry mantra that the devil (regulators) are making them do it, and that poor people will suffer.
Low-income people bore the brunt of the bounce protection programs, since their accounts were more likely to be running on fumes. That’s why many have sworn off banks. Some 9 million households in the U.S. are unbanked, including nearly 20% of those making $30,000 or less.
But FDIC Chairman Sheila Bair is convinced banks can find a way to profitably offer low-cost checking accounts by making most transactions electronic. On Jan. 1 the FDIC launched a pilot program at nine banks to test the such accounts’ feasibility.
In any case, banks have plenty of other options beyond raising their prices. They can run themselves more efficiently, build more relationships with the customers, and (heaven forbid) maybe even trim those year-end bonuses a tad.
To protect yourself from this latest round of fees, you should:
- Closely monitor your account and any communications from your bank. Many banks large and small are planning to impose monthly fees on once-free accounts.
- See if you can (or want to) change your banking behavior to avoid the fees. If you have a spare $5,000 lying around, for example, you can avoid the new fees on some accounts at Bank of America by sticking that money in a savings account linked to your checking. Your interest rate will be dismal, but rates at online banks aren’t much better, so that money may be better off sitting at BofA and helping you avoid the $15 monthly maintenance fee for your checking account (which would be like getting a 3%+ return on your money).
- If you can’t or don’t want to meet the criteria necessary to waive fees, ditch your bank. Many credit unions still offer free checking. You can find which ones you might be able to join here.