NEW YORK (TheStreet) -- Banks are experimenting with new ways to generate revenue in the wake of increased regulation of overdraft fees and interest rate hikes on credit card payments.
Many big banks are considering instituting maintenance fees on checking accounts that previously did not have them and charging for services like fraud alerts, the use of a debit card and access to credit reports. In fact, some banks have already started to hit consumers with these fees.
In recent weeks,
HSBC North America
started charging a monthly maintenance fee on previously free checking accounts, while
announced the suspension of free checking as of July 1.
Bank Of America
is following suit and is exploring tiered checking account options that will encourage consumers to increase activity with the bank.
Regional banks are following the same trend, illustrated by
Fifth Third Bancorp's
decision to drop free checking last fall and allow a customer to avoid monthly maintenance fees only by enrolling in monthly direct-deposit programs or an online bill payment program. Additionally,
, a bank that marketed itself on free checking, started charging its customers earlier this year.
At the end of the day, regardless of what regulators do to prevent banks from engaging in alleged abusive practices, banks will figure out ways to generate additional revenue.
Some exchange-traded funds (ETFs) that could benefit from these new practices include:
Financial Select Sector SPDR
, which boasts Bank of America and Wells Fargo in its top holdings. XLF closed at $14.57 on Tuesday.
PowerShares Dynamic Banking Portfolio
, which focuses on banking stocks and holds Fifth Third Bancorp, Wells Fargo and
in its top holdings. PJB closed at $12.67 on Tuesday.
KBW Regional Banking ETF
, which focuses on regional banks and includes
First Midwest Bancorp
in its top holdings. KRE closed at $24.46 on Tuesday.
When investing in these financial sector ETFs, it is important to keep in mind the inherent risks that they carry. To help mitigate the effects of these risks, it's important to use an exit strategy that identifies when an upward price trend could come to an end.
According to the latest data at
, these price points are: XLF at $14.16; PJB at $11.84; KRE at $23.66. These price points change on a daily basis and are reflective of market volatility.
-- Written by Kevin Grewal in Houston, Tex.
Readers Also Like:
Follow TheStreet on
and become a fan on
Kevin Grewal serves as the editorial director and research analyst at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Additionally, he serves as the editorial director at SmartStops.net where he focuses on mitigating risks and implementing exit strategies to preserve equity. Prior to this, Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton.