PNC Financial Services Group (PNC) is latest bank that plans to do away with free checking.
PNC will phase out its free checking account by June of next year, it said in a statement Monday. It plans to introduce two new checking accounts that will be free to customers who meet minimum-balance requirements and will cost between $7 and $25 a month for those who do not.
The $290 billion-asset PNC will spend the next month informing its customers about the changes; it has rolled out a portal on its website explaining the new fee system.
The changes "are part of our long-term strategy to remain financially strong and invest more in technology and the services that enable customers to bank when and where they want," a company spokesman said in an emailed statement. "We want to encourage more customers to make us their primary bank while providing additional options for anyone unable to meet the balance requirements."
New regulations limiting overdraft and interchange fees have led many banks to eliminate free checking or raise their fees. The percentage of noninterest checking accounts that carried no fees fell to 39% in September, down from 76% in 2009, according to a survey.
In March, PNC Chief Executive Bill Demchak said that the free-checking model was broken and "needs to change."
"Free checking is the bread-and-butter of the business but it was paid for by fees not seen by customers, by swipe fees and overdraft fees. We basically had a subset of clients paying for our core product," Demchak told analysts.
Beginning in June of 2014, PNC customers who currently have free checking will be charged a $7 monthly fee, with an additional $2 monthly charge for paper statements, unless they keep an average balance of $500 a month in their accounts, receive $500 in monthly direct deposits or are age 62 or higher. PNC will offer two other checking accounts with higher minimum-balance and direct-deposit requirements and carry monthly charges between $15 and $25 if these requirements are not met. It will also offer an account with a $7 monthly fee available only for customers that are entering the banking system.
These changes will have no impact on "nine out of 10" current PNC customers, the spokesman said in a statement.