PNC to phase out free checking accounts
PNC Bank will eliminate free checking accounts during the next year as it tries to balance investments in technology for retail banking customers and costs.
The Downtown-based bank, the largest in Pennsylvania and seventh largest nationwide, said Monday it began notifying customers that “every account, with the exception of Foundation Checking, will have a minimum balance requirement and other options to keep the account free.”
“This is part of our long-term strategy to remain financially strong and invest more in technology and the services that enable customers to bank when and where they want,” PNC said in a statement.
The changes fit an industry trend that has developed during the past several years, said Richard Barrington, senior financial analyst at MoneyRates.com, a website that tracks bank rates and fees.
The combination of low interest rates, reduced lending volume and government regulations are pushing banks to add or increase fees, Barrington said.
“Banks are sharpening up their pencils and specifically taking a look at which customers are profitable and which ones are not,” he said. “If you aren't active, then they're going to make the account profitable by hiking fees. That's been a common trend.”
Only about a third of the nation's checking accounts are free of monthly maintenance fees, he said, which average $12.26 a month.
Bert Ely, an Alexandria, Va.-based bank consultant, said he expects the trend of higher bank fees to continue for several years because analysts expect interest rates to remain low.
“The problem the banks have is they're not earning much money on the cash balances because interest rates are so low,” Ely said.
PNC will transfer free checking accounts in June 2014 to a new account, Standard Checking, which carries a $7 monthly maintenance fee. The bank will waive that fee if customers meet at least one of three requirements: a $500 average monthly balance, $500 in combined monthly direct deposits or if the customer is 62 years or older.
Other banks in Western Pennsylvania ended free checking, including Citizens Bank, which requires minimum monthly balances on checking accounts to avoid fees.
In response to PNC's announcement, Huntington Bank said it would continue to offer Asterisk-Free checking accounts with no minimum balance, no minimum debit or check usage requirements or monthly maintenance fees.
Dollar Bank offers free checking accounts and has “no intention of making any changes,” said Joseph Smith, senior vice president.
First Commonwealth Bank also has no plans to change its free checking accounts, said Norm Montgomery, executive vice president of business integration.
“It's been a very good product for First Commonwealth,” he said.
Alex Nixon is a Trib Total Media staff writer. Reach him at 412-320-7928 or email@example.com.