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Wall Street Banks Lure Small Businesses with Free Checking

From: "Wall Street Banks Lure Small Businesses with Free Checking. Moebs Study Shows 91% of Wall Street Banks Now offer Free Business Checking", Moebs $ervices, 8/31/2010

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Moebs Study Shows 91% of Wall Street Banks
Now offer Free Business Checking

(Lake Bluff, IL) August 31, 2010 –According to a recent Moebs Services survey of 2,300 banks and credit unions, 91 per cent of Wall Street Banks (greater than $50B in Assets) now offer free checking for businesses, up from 64% in 2009-- a 42% increase.

Free Business
Free Business
Community Banks 31.8% 34.8%
Credit Unions 38.1% 42.5%
Wall St. Banks 90.9% 64.0%

“’Free Checking’ is a service targeted at small businesses,” said Michael Moebs, economist & CEO of Moebs $ervices.  “The Wall Street Banks want small business checking and it shows in the substantial increase in offerings from 2009.”

Free business checking declined year over year by 8.6% for community banks and 10.4% for credit unions.  “On the contrary, Wall Street Banks are moving more aggressively to attract small businesses,” explained Moebs. “The business checking account is the foundation of the relationship with a small business. “The checking account is the initial enticement that will lead to loans and other services.  Wall Street Banks want this business.”

Free Business Checking is An Apparent Carrot
Unlike regulations for consumer accounts, there are no federal or state advertising or disclosure requirements in the business checking market.  Because of this, depositories can say their business checking is “free”, without disclosing that these accounts do have limits on the number of transactions that are processed for free.  The median limit on all types of transactions for Wall Street and Main Street institutions is 150 per month.  After the monthly allowance of 150 debit and credits have been met, financial institutions will charge a transaction fee.  Community banks and credit unions have a median charge of 25 cents per transactions when the limit of 150 is exceeded, while Wall Street Banks charge 50 cents.

Other fees matter less to small businesses
Wall Street Banks have the highest prices for services to business.  The median charge for overdrawing a business checking account or Non Sufficient Funds at a Wall Street Banks is $35. This is $10 or 40% more than what community banks and credit unions charge.  “Since most small businesses don’t incur that many fees, the allure of a free business checking account is a big draw,” noted Moebs”.  “Wall Street Banks know this. By heavily promoting free checking, they can go after the small business market while limiting their cost exposure. 

    Median Price
2010 Business Checking   Overdrafts   Non-Sufficient Funds   Stop Payments
Community Banks   $25.00   $25.00   $20.00
Credit Unions   $25.00   $25.00   $20.00
Wall St. Banks   $35.00   $35.00   $31.00

About Moebs $ervices
Since 1983, Moebs Services has been collecting primary empirical data about financial institutions’ services, pricing, operating expenses and financial condition and analyzing the data in a counter intuitive manner, which provides solutions that make sense.  For more info please visit


Written By: rnybeck
Date Posted: 9/1/2010
Number of Views: 1467