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Free checking accounts at smaller banks not in jeopardy

Tony Holt Hernando Today
Published:   |   Updated: May 10, 2013 at 03:13 PM

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Big banks are losing money and are reportedly taking steps to put an end to free checking accounts.

Executives at some of the smaller local banks say they have no such plans - for now.

Business pay the brunt of the fees so the individual won't have to, said Morris Porton, a senior vice president at Florida Traditions Bank.

"We still offer free checking and we try to give people the opportunities to have free services," Porton said. "Small businesses are our bread and butter ... They make up most of our business accounts. They pay their way."

The Wall Street Journal reported Thursday that Bank of America Corporation and some of its competitors were preparing new fees for individuals with basic banking services.

Many bankers today don't know what it's like to pay for a checking account. Free checking has been widespread since the 1990s.

If such charges are introduced, customers could still avoid them if they diversify their services and use automated teller machines and debit or credit cards.

Studies show more than half of all checking accounts are unprofitable for the banking industry. Most banks pay up to $300 per year for one of the roughly 200 million checking accounts in the country, according to The Wall Street Journal article.

The way banks make profits has changed dramatically from a generation ago, said Porton.

"It used to be that a bank could take that $1,000 checking account and make about 3 percent," said Porton. "Now banks are lucky to make a quarter of a percent from that."

Since the latest economic collapse and the public backlash following the government bank bailout, lawmakers have implemented new restrictions, including making banks notify customers prior to implementing overdraft fees.

There are caveats to the new restrictions, which will go into effect this summer. Banks may still charge without seeking permission if there is evidence of repetitive overdrafts or if they occur from check payments instead of a random debit card purchase or withdrawal, said Kimberly Darby, a senior vice president at Brannen Bank.

Banks are taking a wait-and-see approach to the federally imposed regulations.

"A lot of things have not actually become effective and a lot of those things people have just heard about it," Darby said. "We haven't experienced what it's going to do to us as of yet."

Fifth Third Bancorp, which has locations in Pasco, Pinellas and Hillsborough counties, discontinued its free checking account offer last year and now offers bundle packages that include fraud alerts, debit rewards and other services for roughly $15 per month.

Darby said Brannan Bank currently has no plans to charge for checking accounts.

She declined to be specific about any changes account holders might face in the future.

"All businesses, including banks, react to the economic conditions and we will continue to do that," said Darby.

Cameron B. Jordan, a spokeswoman with BB&T based out of Winston-Salem, N.C., wouldn't confirm or deny whether the bank has contemplated charging customers for their checking accounts.

"BB&T will continue to evaluate our products and make enhancements from time to time to ensure that our products meet our client's expectations and provide great value," she said.

Reporter Tony Holt can be reached at 352-544-5283 or

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