Free checking accounts should offer more than free maintenance

T he free maintenance costs that are excluded in free checking accounts are no doubt a welcome financial relief for many consumers, but banks that offer free checking accounts could certainly offer more than free maintenance as a way to improve their overall service offering to their customers. Since transactional costs make up the bulk of banking costs and thus the bank’s main money making activity insofar as the business of retail accounts is concerned, it would be unrealistic to suggest eliminating transactional costs. Yet, without having to cut out the transactional costs associated with retail banking, there are certainly other ways of minimising the costs incurred by bank customers. Offering customers a limited number of free online transactions for example is one such way of minimising transactional costs for customers which would be a welcome service offering. There are a number of minor costs incurred by checking account clients that to offer only free maintenance costs with a fee checking account is silly. A good service offering should include only the necessary banking costs, as such all the unnecessary ones should be relegated to the realm of free within the service of a free checking account. Then a free checking account will hold its weight in the claim of being “free”.