For many banks, the demise of free checking has generated less fallout than expected, with account holders generally taking the loss in stride and new monthly maintenance fees helping to offset some of the lost income from service charges.

This was not the case at TCF Financial in Wayzata, Minn. Its bottom line was hit hard by the decision to eliminate totally free checking accounts, as frustrated customers left in droves and income from service charges on deposit accounts plummeted. TCF took in $48.1 million in service charges in the second quarter, a decline of almost 40 percent from just two years earlier.

In late June, TCF announced it was bringing back free checking to help stem the attrition. Early results were encouraging. On a July 19 quarterly conference call with analysts, Chairman and CEO William Cooper said that attrition had slowed and new account openings had increased since free checking got reinstated.

TCF, a pioneer of the free checking model in the 1980s, is more dependent on service charge income than many of its competitors, so it has felt the impact of new overdraft and interchange rules more severely.

The company doesn't break out revenue from monthly checking account fees, but a spokesman says that during the two years totally free checking was gone, "most" customers were able to avoid the new fees that were implemented by meeting certain account usage requirements, like making a certain number of transactions each month.

That's also been the case at many other banks. JPMorgan Chase, for example, said in February that more than 85 percent of its customers qualify to have monthly fees waived.

But larger banks like JPMorgan are not as dependent on their retail customer base for their overall earnings, and so can more easily sustain some attrition when new fees are added.

It's early to say whether other banks will have a change of heart and bring back free checking.

Jeff Platter, a vice president at Haberfeld Associates, a bank consultancy, says he wouldn't be surprised to see at least a few regional banks follow TCF's lead.

But if any do, he says, "it's going to be those in the $10 billion to $20 billion asset range."

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