How much does your checking account cost? Is it free? Or do you pay $5, $10 or $15 per month?
The answer, according to the American Bankers Association, or ABA, isn't zero. Nor is it between $60 and $180 per year.
In fact, the ABA says, the annual cost of a checking account is actually $250 to $300.
Of course, that's not the cost to the banking customer. Rather, it's the expense the bank incurs to maintain that account for that customer for one year, and it's a figure that tries to suggest banks lose money on most of these accounts.
"In fact, the cost of opening an account runs between $150 and $200, and the yearly cost of maintaining an account runs between $250 and $300. These costs reflect the expense of processing transactions, providing monthly statements, investing in payment system technology and software, paying the cost of tellers, ATMs, and online banking, staffing call centers, complying with countless regulations, ensuring privacy and data protection, and preventing fraud and covering fraud losses," the ABA explained in a one-page analysis, "The Cost of a Checking Account."
For the record, the ABA's footnotes attribute the $150-to-$200 figure to Robert C. Giltner of Velocity Solutions in Wilmington, N.C., at BAI Retail Banking Solutions Live, May 19, 2010, and the $200-to-$300 figure to an estimate by Celent, a unit of Marsh & McLennan Cos., in May 2010 as reported in a June 17, 2010, article, "The End is Near For Free Checking" in The Wall Street Journal.
Sure, tellers, ATMs, online banking and call centers cost money as do technology, regulatory compliance and fraud. And sure, it's reasonable for banks to be sensitive about this issue since customers have been warned that financial reform may kill off free checking accounts and the Federal Deposit Insurance Corp., or FDIC, has released two templates for very affordable basic bank accounts.
But doesn't it seem convenient, even disingenuous to imply that those big categories of costs relate only to checking accounts when they're actually overhead expenses that apply to every other banking service as well?