Bank of America, like many other banks, was charging people fees of they overdrew their accounts- $35 for each event. This would mean, with the advent of debit cards, that a $3 purchase could put you in the red and cost you a $35 fee. It wasn't long before customers fought back by taking their business elsewhere.Eighteen percent of checking accounts were closing each year, as customers voted with their dollars and their feet. Bank of America eliminated the policy and reduced account closures to 13% In other words, the free market worked.
That wasn't good enough for Congress. They passed a slew of regulations that eliminated these charges. In other words, price controls. Since Bank of America saw 12% of its revenue from the charges that were just outlawed, they responded by spreading the costs among all account holders.
"Customers never had free checking accounts," Bank of America spokeswoman Anne Pace said. "They always paid for it in other ways, sometimes with penalty fees."
TANSTAAFL.That is something that I taught my children from a young age. Nothing is free, everything comes with a cost. Either it is pay per use charges like overdraft fees, or there will be some other fee, but I don't go to work for free, neither do you, and someone has got to pay the bills.
