Policy

Happy Birthday to the Dodd-Frank Rule That Killed Free Checking!

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birthday check

One year ago today, the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act went into effect. Designed to protect consumers from high fees on debit card transactions, the new rules inadvertently put an end to free checking as we knew it.

After the new rules kicked in, the banks started looking for ways to make up for the lost revenue, experimenting with $5 monthly changes on low balance checking accounts and other maintenance fees.

In honor of this inauspicious anniversary, John Berlau of the Competitive Enterprise Institute writes:

According to the just-released annual survey of Bankrate.com, only 39 percent of banks offer free non-interest checking accounts with no minimum balance, down from 45 percent last year. As the Huffington Post puts it, "If free checking accounts were animals, they'd be on the World Wildlife Fund's list of endangered species."

The results of this legislation (and the Federal Reserve rules it authorized) have made some responsible checking account holders pretty darned unhappy. But that hasn't stopped lawmakers and regulators from looking into putting the same kinds of caps and fee restrictions on credit cards as well. And then that happens, customers on the bottom end of the scale can look forward to bigger annual fees and fewer rewards points or frequent flyer miles. All of which compels us to say one more time: You Can't Call It an Unintended Consequence if You Knew It Was Going to Happen.