Wells Fargo Ends Free Checking in North Carolina

May 11, 2012 at 2:36 pm 1 comment

Starting August 7, customers of Wells Fargo & Co. with checking accounts will be charged a $7 fee. Like most of the other large banks, Wells Fargo had discontinued free checking back in 2010, but many customers who had transferred from Wachovia with free checking were able to hold on until now.

Customers who elect to go paper-less will be assessed a lower fee of $5. Customers can avoid the fee entirely by maintaining a $1,500 minimum balance or having $500 or more in direct deposits per month. Although Wells Fargo says that it estimates 80 percent of its customers will be able to avoid the fee, that still leaves 20 percent. These will be the most financially vulnerable customers– the ones who are unable to maintain the minimum balance or have $500 directly deposited.

Bank fees such as this are completely regressive. The impact on lower-income customers will be greater than the impact on higher-income customers who will be able to meet the minimum requirements to avoid the fee. Wells Fargo says that it costs the bank $200 to $300 per checking account. Who will be footing the bill? With this fee structure, lower-income account holders will be the ones paying for the checking accounts of higher-income account holders. In addition, an across the board fee doesn’t take into account how the fee compares to the amount held into the account. In other words, a $7 fee assessed on an account of less than $1,500 is much more of a burden, proportionally, than it would be on an account with much more money in it. Even the paper-less reduced fee option privileges those with internet access who can receive statements electronically, when for many North Carolinians this is not the case.

The News & Observer quotes an analyst from Bankrate.com who states that “The bottom line is,  you’re not hostage to these fees. There are ways to get around it, either at your current bank or by shopping around.” While it’s true that most people will get around the $7 fee, for those who can’t they will either end up paying the fee–  thereby subsidizing Wells Fargo’s checking account service– or they’ll end up leaving all together. Hopefully they will end up at a credit union or community bank where free or affordable checking accounts can still be found.

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Entry filed under: Banks, Credit Unions, Financial Reform. Tags: , , .

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