The End of Free Checking?

“The decline of free checking is the first of many middle-class perks likely to vanish in the rush to regulate.”

That was the conlcusion of John Berlau, director of the Center for Investors and Entrepreneurs at the Competitive Enterprise Institute. Berlau’s recent oped in the Wall Street Journal lamented the loss of certain conveniences that banks have sacrificed to comply with new financial legislation and regulations.

Over the past few months, the middle class has seen a beneficial feature of modern banking—free checking—begin to vanish due to these “reforms” and the substantial loss of bank revenues that they’ve caused.

There are two main culprits in free checking’s demise: the Federal Reserve’s new rules, in effect since July, that restrict banks from charging overdraft fees when customers overdraw their checking accounts; and the amendment from Sen. Dick Durbin (D., Ill.) in Dodd-Frank that puts price controls on the interchange fees that merchants pay to banks and credit unions to process debit cards.

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