A new study has found the average consumer got more access to free checking accounts after Congress passed the Durbin Amendment in 2010.
The amendment, part of the Dodd-Frank Wall Street Reform and Financial Protection Act, authorized the Federal Reserve to cap the fees that retailers and other companies pay banks when consumers use a debit card to purchase products or services.
The study, "The Impact of Debit Card Regulation on Checking Account Fees," was written by Richard J. Sullivan, a senior economist at the Federal Reserve Bank of Kansas City.
Many experts predicted that banks would limit free checking accounts and increase checking account fees as they lost revenue because of these caps on debit card swipe fees. The study found many of large banks subject to the caps raised their checking account fees, but thousands of small banks exempt from the caps had taken "varying approaches" to checking account fees.
On balance, consumers had more access to free checking after the Durbin Amendment regulations became effective in late 2011, the study found.
"Regulated banks were more likely to raise checking account fees, but exempt banks were more likely to reduce or eliminate fees," the study concluded.
"Consumers' net increase in access to free checking stemmed mainly from the greater availability of free checking at exempt banks," the study said.
The increased access to free checking accounts was especially notable at the larger exempt banks, the study found.
"Regulation of interchange fees for debit card payments eliminated roughly $8 billion of revenue at regulated commercial banks," the study stated. "Such a large change led many regulated banks to drop free checking. Some exempt institutions may have seen the regulation of interchange fees as an opportunity to drop free checking and earn added revenue from deposit services. However, more exempt banks, particularly larger exempt banks -- those with strong loan demand and a need for additional funding -- decided to add free checking."
The increase in free checking accounts at smaller exempt banks more than offset the decline in free checking accounts at larger banks subject to the caps, the study concluded.
"While (free checking was) generally more available, a consumer who wants free checking may have to switch to a smaller bank," the study said.
How about you? Do you still have free access to your checking account?
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