PNC Bank will stop offering a free checking account option to customers in the next 12 months, the Pittsburgh company announced in a statement Monday morning.
The bank claims the change will affect a small percentage of customers, but the move follows a national trend of financial institutions working to find new revenue in account fees and other charges.
It might also be a reflection that checking account deposits aren't as coveted as they once were.
"The interest rates on the loans that banks are making is very low right now, and loan demand is not where it was before the financial crisis," said Claes Bell, senior banking analyst at online financial website Bankrate.com in North Palm Beach, Fla. "So consumer deposits are not as valuable, and consumer banks are no longer willing to offer free checking just to raise their deposits."
PNC said it will be notifying customers through July 9 that it will be phasing out free checking accounts in June 2014.
In lieu of the free checking account, the bank is introducing a product called the standard account, which customers can use for free if they meet a $500 minimum balance or are age 62 or older. If customers meet neither requirement, the bank will charge a $7 monthly fee.
PNC's online banking tool, Virtual Wallet, also is being modified to incorporate the new fee structure. Customers will be charged a $7 monthly fee unless they meet the same minimum banking requirement or agree to only use electronic methods to make withdrawals, deposits and cash checks.
If customers with free checking accounts do not manually change their account type by June 2014, their accounts will default to the new standard checking account.
"This is one way that we can remain financially strong and continue to invest in technology and the services that customers want," said Patrick McMahon, PNC director of public relations. "The technology that customers want is a significant investment."
Mr. McMahon said the new account requirements will not affect nine out of ten customers, whose balances already exceed the new minimum requirement.
A survey by Bankrate.com found that, in 2009, 76 percent of American banks offered free checking options that did not require minimum balances or other restrictions. That number dropped to 39 percent in 2012.
In November 2012, a survey conducted by the Post-Gazette of the top 10 banks in the Pittsburgh region found eight offered free checking options, down from nine the year before.
Following PNC's announcement Monday, the region's top two banks as ranked by deposits will both have limitations on consumers' access to free checking. Citizens Bank is the second largest.
In contrast, the region's third- and fourth-largest banks, First National Bank and Dollar Bank, will continue to offer free checking options that do not have minimum balances but do require that customers use online statements rather than print.
"We still have free checking that requires no minimum balance," said Joseph Smith, senior vice president for marketing at Dollar Bank. "We have no intention of changing that."
No. 6 Huntington Bank also put out a statement distancing itself from PNC, saying it would continue to offer free checking.
Michelle Hackman: email@example.com First Published June 10, 2013 11:45 AM