Thank millennials for your free checking account
by: Lucy Mueller
Just as quietly and mysteriously as it began, America’s antipathy for millennials disappeared.
After years of trend pieces about “Generation Broke,” Gen Y has risen above its festering reputation. Why? Quite simply, millennials are better with their money than you are. They save fastidiously, contribute to their 401(k)s and think things like “Am I going to be house poor?” — which isn’t exactly groundbreaking but also isn’t something a lot of Americans concerned themselves with a decade ago.
With all the buzz about what millennials are in the process of changing forever — the wine industry, for one, the work place, the Republican party — it’s no wonder that this generation has already left its mark on consumer banking.
Most people are wrong about millennials’ biggest contribution to the financial space. They assume it’s a dip in mortgage originations or the popularization of mobile banking.
Both are true — but there’s one banking product that millennials have actually saved from the brink of extinction, without even realizing it: the free checking account.
It doesn’t look exactly the same as it did five years ago. You probably won’t be writing checks or visiting a branch to deposit cash. But if you’re OK moving most of your checking online, you’ll likely be able to avoid fees completely.
Why the Free Checking Account Disappeared in the First Place
Don’t get too excited; free checking accounts are still relatively rare at national banks, and have been for half a decade. Back in 2009, 76 percent of all noninterest checking accounts were free; these days, that number is closer to 38 percent, according to The Associated Press.
This is because, in the year following the financial crisis, the federal government started to regulate one of the biggest cash cows for national banks: fees. For the first time, banks were limited in how often they could charge overdraft fees and how much they could penalize merchants for debit and credit card transactions.continue reading »