Media Contact:
Patricia Harden
Harden Communications Partners
Tel: 510.635.4150
PHarden@hardenpartners.com
John Lopez
Harden Communication Partners
Tel. 415.517.9760
JLopez@hardenpartners.com
FREE CHECKING FALLS 11 PERCENT AT BANKS AND CREDIT UNIONS
Moebs Study Shows Financial Institutions Streamline Checking Accounts but Raise Fees
Lake Bluff, IL, (Aug.25, 2010) -- U.S. banks and credit unions have cut back on the use of free checking in the last year, with an 11 percent drop in the number of banks offering the service today compared to one year ago, according to a national study of 2,265 financial institutions by Moebs Services, an economic research firm in Lake Bluff, Ill.
“This year, our study showed that 72.5 percent of the institutions surveyed offer free checking accounts to consumers vs. 83.5 percent that offered them a year ago. That’s an 11 percent decline year over year,” said Mike Moebs, economist and CEO of Moebs Services. Moebs believes the reason for the current decline is threefold: the new financial regulations and reform that went into effect this summer, the economy’s malaise and the general move away from free checking among Wall Street banks.
Why Free Checking Continues
“In the past 10 years, free checking offers have generally risen, with just an occasional drop,” said Moebs. “We saw a slight fall in 2002 and again right before the mortgage bubble burst in 2006,” he explained. “Some depositories have stopped offering free checking as a way to reduce costs in light of overdraft and financial regulatory reforms. Others face low earnings and a shortage of capital, so lower expense and higher revenue are needed to rebuild their capital position, especially at Main Street institutions,” Moebs noted.
The reason for the recent decline in free checking, Moebs said, is the new financial regulation that went into effect on August 15th, the weak economy, and the Wall Street banks moving away from free checking. “They are also making greater use of e-statements and direct deposit to cut costs,” commented Moebs. “63.6 percent of Wall Street banks offer free checking in 2010, compared with 92.6 percent in 2009. In contrast community banks’ use of free checking declined to 71.7 percent from 78.3 percent, while credit unions fell to 73.4 from 89.3 percent,” cited Moebs.
Overall what’s happening with Consumer Checking
The Moebs Study shows a trend toward simplification of checking accounts. “Many depositories have reduced the number of checking offerings,” Moebs points out. “Interest checking and non-interest checking, or just two accounts, is the name of the game. Free checking dominates the non-interest market.” The chart shows the median values for depositories by type, regular or interest checking accounts, the minimum balance required per month, the fee for falling below the minimum balance, and interest rate offered.
“Now is a good time to shop for a checking account, but consumers need to do this wisely looking for the best deals which appear to be with the Main Street Institutions,” noted Moebs
About Moebs $ervices Surveys
Since 1983 Moebs $ervices has been collecting primary empirical data. The 2010 Financial Pricing Survey went to 3,495 banks, credit unions, payday lenders, retail merchants, and credit card issuers. The Consumer Checking Financial Survey went to 2,265 banks and credit unions. The final survey was completed August 3rd. This national statistical study’s precision is 99%.
###