Boca Raton, Fla. — The majority of U.S. Bancorp customers have found ways to avoid paying monthly fees, after the bank phased out its "free" checking accounts, an executive told American Banker.

U.S. Bank is one of several large banks to add or increase the fees on checking accounts, in an effort to compensate for revenue they have lost from regulations on overdrafts and debit card interchange fees.

The Minneapolis bank revamped its tiered checking account system last summer, replacing its basic Free Checking account with one called Easy Checking. The bank charges a $6.95 or $8.95 monthly maintenance fee for Easy Checking, depending on whether a customer opts for paperless statements.

But U.S. Bank customers can avoid paying the fees if their account receives $500 or more in direct deposits each month, or if they keep a monthly deposit balance of at least $1,500. So far, most consumers are doing just that, according to Kent Stone, an executive vice president for U.S. Bank's strategic support services for consumer and small business units.

"The biggest surprise when we reintroduced our checking line was [that] we underestimated the number of customers who would find a way to have accounts waived. We thought more would pay a fee," Stone said in an interview at a retail financial services conference on Tuesday.

For bank customers faced with new fees, it's "human nature" to find a way to avoid paying them, he said.

"It's a game: 'Oh, I need to have direct deposit, I'll figure that out. I need to have some money in the account, I'll figure that out,'" Stone said. "The majority of our customers find a way to have account fees waived."

In many cases, the waiver might not require any extra effort on the part of the consumer, according to Carl Rutstein, a senior partner at Boston Consulting Group, who joined Stone for a panel discussion about improving retail bank performance at the conference.

"Often the waivers [apply for] things that customers needed anyway," Rutstein said in an interview. "So if you have your mortgage with U.S. Bank, you probably qualify for a package."

Even if some customers are not reacting negatively to new fees, Stone cautioned that banks still need to be careful about how they introduce such price changes.

For example, Bank of America Corp. continues to find itself in the spotlight as it tests new checking account fees, after the bank notoriously had to retract plans for a $5 debit card fee last fall.

"I think we've been very deliberate about fee changes. You know of good examples from the marketplace recently, a major bank and Verizon …where there's been a lot of public outcry" over fee changes, Stone said.

The annual Best Practices in Retail Financial Services Symposium was sponsored by American Banker and its publisher, SourceMedia Inc.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.