This is a Guest Post.
In the current economy, the options for free banks continue to dwindle. However, this is not as bad as it sounds, since paid current and savings accounts can have many benefits over their free counterparts. In fact, many people are switching to paid bank accounts in order to take advantage of the extra services offered by these banks. Free Banks Are On the Way Out and here are some reasons why paid accounts can actually be more beneficial than free accounts, kindly provided by Clydesdale Bank.
Better Interest Rates
A bank is a business at the end of the day. Banks collect fees from their patrons in some way in order to stay in business. Banks that charge fees usually also offer higher interest rates. This means that, over time, many people will end up making more money off of their savings that they would have paid in service fees. Free accounts, instead, usually offer much lower interest rates and take advantage of people’s deposits as free capital. Choosing a bank with a modest service fee and a good interest rate can be the much better choice over time.
Fewer Hidden Fees
Another way that free banks can make their profits is by charging hidden fees. Each service that the bank offers tends to come with a fee, and often the fees are not transparent from the beginning. Customers of these banks end up with charges that they weren’t expecting. With paid accounts, people know what they are paying per month. If fees exist for individual services, these are clearly laid out. There is more of a stake in satisfying customers when they are paying. And again, the bank does make money from its clients somehow; it’s up you whether that money is made through a service fee or through unexpected charges for services.
More Branch Locations
Another drawback of many free accounts is that they are offered in less than ideal locations. They may have very few branches or even be completely online. These can be fine options until you run into a problem and need to speak with a representative. The greater availability of nation wide ATM networks and in person branches is usually a benefit of choosing a paid account. Availability of customer service options can be a big factor for those who make frequent transactions with their accounts. Also, a larger bank with a paid account is more likely to have support networks throughout the country and abroad.
There are plenty of great paid bank accounts, while fewer and fewer free accounts exist these days. The transition into paid banking isn’t all bad, however, since more paid banks can offer great services and rates without having to compromise service to make a profit. With a bit of research, you can find a great paid bank account that offers enough to make up for the monthly service charge.
Comment if you want to discuss the topic, Free Banks Are On the Way Out & Here’s Why That’s a Good Thing
I think there are too many un-banked and under-banked individuals who don't have access to an account already, and are stuck paying the fees on prepaid cards and the like. If they can get access to these banks, all the better. But there is still a large segment of the population lacking access to banking services that need to be addressed. Of course, their accounts likely won't make the bank much money, if any, so they will still probably continue to be under represented.
I agree about people needing other banking options. If banks feel free banking services are not profitable then I guess their is nothing we can do. Thanks for the comment.