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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 08, 2014 at 10:16 am

Patricia, you have the issue wrong about all men are not created equal, All men are truly created equal only to become unequal due to drive, intensity, integrity and most of all hard work. So, for those that feel life is unfair, no one guaranteed a free ride except the US government for those lazy folks that refuse to work, continue to breed like rats and live off the honest paying taxpayer.

June 08, 2014 at 9:48 am

I have read all comments and I can believe that the point is missed. Every time the big banks take away something that you have had they are leaving you with less choices. Why? Because some people questioned they. We are not to roll over and play dead. We should be able to choose how we want to pay for anything. We should be thinking how to protect our money. Not how fast we should give big business. The bank do no give you your money just because you walk in and decide to take it out. They find reasons to hand you a check not cash and that check does not clear for days. I don't know about all of you but I make them wait for it just like they make me wait. By the way, I have excellent credit scores over eight hundreds and I sit on a banking committee. Thank you!

June 08, 2014 at 8:41 am

I closed some 8 accounts at Nations Bank because they charged me a monthly fee one escrow account (even though I had some $50K per month in all accounts combined). They always found reasons not to lend me money to finance a 5 unit apartment building. After being with Nations bank and it predecessors for some 20 years, I switched to SunTrust about 10 years ago with no regrets.

June 07, 2014 at 10:18 pm

I prefer overdraft protection and writing paper checks to pay bills. If that goes away from my bank, I will leave my bank as well.

June 07, 2014 at 9:36 pm

Jeff, maybe your grocery store needs to invest in registers that scan the checks. Even the self-check out registers that are popping up all over have built-in readers. Not wanting to accept electronic payments has nothing to do with being in the dark ages. Small businesses don't like to do accept credit or debit card for payment they have to pay a percentage of the sale in fees to their bank and this eats into their profits.

June 07, 2014 at 9:06 pm

Very few places won't accept electronic payment. Those that don't are stuck in the dark ages and refuse to modernize. Electronic payment gets them their money instantly and with a lot less risk then with a paper check. It is also a way for those businesses to justify charging you late fees by simply saying they never got the check which 99% of the time is untrue. It just is lost in their antiquated system.

June 07, 2014 at 9:03 pm

Most people don't even use checks any longer. Last time I went to the grocery store the clerk had to duck under the counter and drag out and dust off his check reader because a customer wanted to pay with a check.

June 07, 2014 at 8:57 pm

Why is it called a checking account if you can't write paper checks? Isn't this sometimes necessary to maybe pay bills to those who won't accept payment electronically?

June 07, 2014 at 7:37 pm

I am a very Senior, and have free checking, free checks and free Golden poppy cashier's checks. How long do you think it will last ??

June 07, 2014 at 6:54 pm

anything to torment the working poor. these folks were obviously the rich 1% hah hah who wanted no overdraft and no direct deposit advance they didn't need it anyway. if you have an emergency and need gas to go to a doctor or hospital just hold out your thumb and pray for a good Samaritan.......hope to SH%*T your or your child don't die... ALL MEN ARE NOT CREATED EQUAL ONLY THOSE WHO OWN OIL WELLS!!! this is today's America you have it or don't you are not going to get it no matter how hard you work. you must have a piece of paper says I have a degree I know because my oil well bought it.