How to Keep Free Checking

In the not-too-distant future, free checking will be a thing of the past. Well, maybe.

A story in The Wall Street Journal has caused quite a stir saying many banks are likely to cancel free checking to make up revenues lost from new regulations, like those curbing overdraft fees for checking accounts and credit cards.

So, what should you do if your bank will start charging for a simple checking account? Do you just have to live with it?

First, let’s not assume the demise of free checking is a done deal. Banks always say new restrictions will raise costs for customers. Despite the crocodile tears, it doesn’t always happen.

One reason is good old competition. Some banks are sure to figure that free checking is a good way to steal customers from banks that are starting to charge for it. Free checking is also a tool for establishing a relationship with a customer who may later use more profitable products like credit cards, mortgages and brokerage services.

But let’s assume your bank does eliminate its most basic no-strings-attached free checking account. What should you do?

First, see if the bank will continue providing free checking with a few painless requirements.

For example, you might get free checking if you have your paycheck automatically deposited in your account. This is a convenient service that allows you to avoid a weekly rush to the bank before paying bills. With direct deposit, you might have quicker access to your salary, and you won’t have to worry about getting paid in advance or missing paychecks when you go on vacation.

Or the bank may offer free checking if you keep a minimum amount in the account. This could be relatively painless if, for example, you have a rainy-day fund earning almost nothing in a money-market or other low-interest account.

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