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KeyBank offers no-overdraft account

By Allison Ross ·
Monday, June 2, 2014
Posted: 11 am ET

Recognizing that customers hate paying fees on their checking accounts, KeyBank has unveiled a new product that removes account activation and monthly fees and doesn't allow consumers to overdraft accounts.

The Hassle-Free Account was made available to customers late last month. It has no monthly fee, no balance requirements and free online banking, mobile banking and online bill-pay. Customers using this account have free access to the 1,300 KeyBank ATMs but can't write paper checks.

"People want simple and clear banking with no surprises," says Dennis Devine, co-president of Key Community Bank. He says this account will allow customers to spend less time worrying about minimum balances or navigating the fee rules on checking accounts.

In March, Bank of America rolled out a checking account that also eliminated the potential for overdraft fees for consumers. It hoped to appeal to customers who struggle to manage their account balances and were drawing often hefty overdraft fees.

Devine says the introduction of the Hassle-Free Account was in response to consumer demand. He says market research found that 64 percent of consumers surveyed choose banks based on fee structures, followed by problem resolution (61 percent) and how easy it is to do business (58 percent).

"This takes the fee issue off the table," he says. "Let's get past that and work with you on much more important questions you have."

Fewer and fewer banks have been offering free checking accounts, according to Bankrate surveys. From 2009 to 2013, free checking declined from 76 percent of checking accounts to 38 percent, although it appears to be plateauing.

Even for those checking accounts that aren't free, there are often ways to get around having to pay those fees, such as keeping a minimum balance or enrolling in direct deposit. Devine says the vast majority of KeyBank clients already don't pay any monthly checking fees.

Devine says that "managing money is not a one-size-fits-all proposition," and that while he expects this account to have broad appeal, others may be drawn to accounts that offer, for instance, foreign ATM waivers or a relationship rewards program.

What do you think of this new account? Think other banks will follow suit?

To see how free checking fares at credit unions, check out Bankrate's 2014 Credit Union Checking Survey.

Follow me on Twitter: @allisonsross.

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June 16, 2014 at 7:22 pm

Never did understand why the banks let accounts overdraft. Used to argue with them all the time. If I try and buy something, either the money is there or not, seems pretty simple. I would prefer to ditch them all together.

They let accounts overdraft because they can, have you opted in for overdraft protection? That would be a start, but all that does is let the charge go through,and you are instantly charged an overdraft, if opted out its still the banks discretion but you will most likely be able to buy a root beer, snickers, and a pack of Marlboros for the low price of $7 + $35-$50 overdraft, 42-57 bucks Good deal right? I'd rather not have the goods and keep my 57 bucks, but you can opt in and pay it if u really want the goods

June 15, 2014 at 10:39 am

BECU banking also charges for charges

June 08, 2014 at 3:40 pm

Banks can be crooked, I had 1 in vt MB. I had $10000. in my savings I was out of state wrote to many checks so instead of transferring from the savings they charged me so I emptied my accounts said bye and they wonder why !

Lynne Starcher
June 08, 2014 at 3:11 pm

I can tell you from experience with Bank of America they invent accounts to pull in customers from a specific type and then within 1 to 2 years, that account is eliminated and those customers are migrated to accounts that are supposed to be "similar", however it always turns out the "migration accounts" benefit the bank not the customer. I have seen this same scenario happen with Bank of America over and over again in the last 10 years. Smaller institutions hopefully will be more intelligent than that because they are more involved with their customers. Guess time will tell.

June 08, 2014 at 2:56 pm

Never did understand why the banks let accounts overdraft. Used to argue with them all the time. If I try and buy something, either the money is there or not, seems pretty simple. I would prefer to ditch them all together.

June 08, 2014 at 12:46 pm

Why is it still called a checking account? Probably for the same reasons wireless telephone companies tout "adding lines for friends and family" has been years since my phone has had an actual "line" Or why do we still call it a "dial" tone? "Checking" accounts, like phones are moving forward as technology, consumer demand and business response allow.

I hardly think these accounts "torment" the working poor. In fact, I think this will help many poor who get into the overdraft-fee trap by not allowing overdrafts. This makes sense (and I don't expect banks to loan money for free, so this to me is a workable alternative).