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Free Banking, Fine Print – Personal Finance Lessons

While I was speaking with my father today, I learned that he got to feel the collective sting of “Free Checking”, “Rewards” and the Durbin Amendment. He was surprised to find his account $35.00 lower than he expected!

Clearly a mistake, he approached a teller to inquire about why his account was lower than expected. After a few minutes, he realized what happened: the bank played him.

He’s had an account with the bank for a while, but a strange thing happened after the Durbin amendment: banks were making less money.

Quick Durbin Amendment History

For those who don’t know, the Durbin amendment was added to a bill to punish banks for charging too much on debit interchange fees. The all-knowing U.S. Congress passed the Durbin Amendment off as a consumer advocacy measurement.

By making credit card fees lower for businesses, then those businesses would surely pass the savings on! I wish I lived in their world!

Instead, prices remained the same, and the banks had to find a way to get their profit back. That’s where you, me and my father fit into the picture. They began thinking of creative ways to make money, such as increasing fees, and new fees. Those fees are where my father’s story began.

“Free” Checking

My father had this bank’s “free” checking, which was tied to his debit card. Up until recently, that checking was free (the real kind), but now they require at least 7 withdrawals a month on the account, or they charge a $5.00 fee.


My dad had a “rewards” debit card. Being that he doesn’t use it all that often, he doesn’t exactly rack up the rewards points. What is his “reward” for this debit card program? A $30.00 annual fee.

After a rather animated conversation with the teller in which he informed her that he doesn’t find a $30.00 fee to be much of a reward, and how he was surprised that “free” checking cost him $5.00, he had them close the account.

Banking Tactics

Be careful of banking tactics. While you’re learning how to get out of debt, the banks are trying to figure out how to profit from it. Banks are hungry for revenue now, and fees are a large part of that. Read every little slip of paper that comes in from your bank, especially any of the disclosures that come with your debit and credit cards.

Banks aren’t making as much from revolving balances on credit cards, so they’re doing anything they can to shore up their cash flows. That means getting better at attracting new customers with balance transfers, loan consolidations and many other offers, but make sure you’re not being lured into a deceptive situation.

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