Lots of news about checking accounts in the past few weeks, including a fee increase at Citibank, a new checking account from Wal-Mart, news about why we overdraw our accounts and what factors drive consumer decisions about banks:

• Citibank increasing fees on checking accounts.  Good reminder to students that all terms are “subject to change” and to come up with strategies to circumvent fees (CNN Money):

These fee hikes put Citi on the pricier side. Across the board, the average monthly fee for a basic interest-bearing checking account (like Citi’s rewards account) is currently $14.76, according to Bankrate.com. That compares to Citi’s new fee of $25.  Meanwhile, the average fee for a non-interest bearing account (like Citi’s basic account) is $5.26 a month, while Citi will soon be charging $12.

• What drives consumer’s decisions about checking accounts (Financial Brand)?

• With overdraft fees a multi-billion dollar business for banks, GoBanking delves into the question of why consumers overdraw their accounts:

• CFPB looking at checking account screening process by banks (Credit Union Times):

“It is one thing to use a credit report or similar type of consumer report as a means of assuring that consumers do not take on more risk than they can handle. Indeed, the bureau would be concerned if banks or credit unions were to grant credit to consumers without regard to their prior credit history,” Cordray said. “For most consumers, though, checking accounts are not inherently credit vehicles, but instead are products for depositing and transferring funds. So it is troubling then that banks or credit unions may use a credit report to exclude some consumers from these basic financial services.”

• Trend toward banks offering checking accounts without checks (CNN Money):

A growing number of banks are launching checking accounts, without the checks.  CitiBank is the latest to introduce a checkless account, with the launch of its new Access Account announced on Tuesday.  The move is in response to an ongoing decline in check use, with a recent survey of 2,500 random consumers confirming what the bank had long suspected: that well over half, or 65 percent, of U.S. consumers either don’t own a checkbook or prefer not to use checks — opting for online or mobile payment tools instead.

• What impact will Wal-Mart’s new checking account have on its competitors (US News and World Report)?

More than a quarter of Americans are unbanked or underbanked, according to the Federal Deposit Insurance Corporation. Without access to traditional banking services, many pay thousands of dollars in fees to use check-cashing services, payday loans and other alternative financial services. New players like mobile banking startups and potentially even the U.S. Postal Service hope to fill the gap left between traditional bank services and their alternatives.

Wal-Mart already offers basic financial products and services such as prepaid cards and international money transfers, but the retailer recently announced its entrance into the checking account market through a partnership with Green Dot Corporation (Green Dot is the bank; Wal-Mart is the distribution channel). After testing the mobile checking account GoBank in select locations late last year, Wal-Mart plans to offer the checking accounts in more than 4,000 locations throughout the country by the end of this month.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.