Seems like Chase and Fleet have free checking but they require you to have direct deposit. THey are the banks with the largest footprint around me and Wash Mut has too few branches. What difference does DD make anyway?
Free checking only with Direct Deposit
- Thread starter DemonHunter
- Start date
Direct Deposit is just to guarantee you will be using the account. Their hope is that you will spend more than you make and therefore can make money off of pentalties.
edit: Drunk. forgive spelling...
edit: Drunk. forgive spelling...
Banks want to keep their customers. Banking is very aggressive, especially community banking. Direct deposit is used to reassure that the bank keeps their customer. If a customer has a checking account with direct deposit, they are most likely to hold their account much longer than those without direct deposit. The trouble it would be to change your direct deposit information to another bank is something that most people just dont feel like doing, even if they're unhappy with their bank. The longer a bank holds a customer, the more time they have to offer and succeed with new accounts and products for that customer.
I'm sure it must cut down on costs somehow...direct transfer from one bank to another. No paperwork, no human needs to be involved.
Deposit check at the teller or ATM, and someone needs to deal with it.
SP33Demon
Lifer
- Jun 22, 2001
- 27,928
- 143
- 106
Yes, what he said. The bank is more effiecient with DD, and their tellers can do more if everyone in drivethru isn't depositing their checks manually. So indirectly it does save them money (the opportunity cost of their bank tellers).
I also agree that it may equate to more of a commitment if the person does DD, it is a pain to switch it.
It happens often if you use a debit card (which banks are so happy to give out freely) with shady sites. They place holds on products you ordered, and they never ship anything or even cancel your order. The hold still is in effect for several business days. A lot of people don't realize what a hold is. They just think that since the company never sent them anything and in fact cancelled their order that their bank balance hasn't been touched. Not the case. Until the hold drops off, the person has an incorrect assessment of their current balance and this can lead to potential overdraft issues. Of course, most banks offer overdraft protection and will happily pay any overdraft, for a fee, often stiff, ridiculous, fee.
my bank has a couple options:
1. free checking, no minimum balance, but $2 service fee per month. $2 credit every month with direct deposit to that account.
2. minimum $500. no fees.
3. minimum $1000. <1% interest.
1. free checking, no minimum balance, but $2 service fee per month. $2 credit every month with direct deposit to that account.
2. minimum $500. no fees.
3. minimum $1000. <1% interest.
RossMAN
Grand Nagus
- Feb 24, 2000
- 79,034
- 441
- 136
Here in the Pacific NorthWest, there are two banks which offer free checking with NO DIRECT DEPOSIT requirements 
Washington Mutual and Bank of the West
Washington Mutual and Bank of the West
dullard
Elite Member
- May 21, 2001
- 26,074
- 4,725
- 126
No they don't make money, but they save money. Each deposit is quite expensive for a bank. My father was the chief financial officer for quite some time at a bank. His job was to make things as profitable as possible. The average deposit of a check cost the bank ~$2 if you include all the extra labor and supplies. That number was from 10 years ago, so I assume it is higher by now.
Why is it so expensive? Banks hire people as their sole jobs to handle all these checks (yes machines can aid in this process, but people are still needed). A check needs to be hand typed into their system, personally investigated for accuracy and authenticity, a photograph needs to be taken of each check - and photos are expensive, and all of this must be sorted and stored (the photos, the checks, the computer data). You could potentially include teller costs as well, but often that is a fixed cost and a few fewer checks won't affect the minimum number of tellers you need.
By going to direct deposit, small banks can use a part time employee to do this instead of a full time with benefits. Large banks can layoff many employees. Plus they save on the photo costs, the sorting costs, and the storage costs.
Keeping customers is also a benefit to the banks, but that benefit is difficult to quantify into dollar terms.
Why is it so expensive? Banks hire people as their sole jobs to handle all these checks (yes machines can aid in this process, but people are still needed). A check needs to be hand typed into their system, personally investigated for accuracy and authenticity, a photograph needs to be taken of each check - and photos are expensive, and all of this must be sorted and stored (the photos, the checks, the computer data). You could potentially include teller costs as well, but often that is a fixed cost and a few fewer checks won't affect the minimum number of tellers you need.
By going to direct deposit, small banks can use a part time employee to do this instead of a full time with benefits. Large banks can layoff many employees. Plus they save on the photo costs, the sorting costs, and the storage costs.
Keeping customers is also a benefit to the banks, but that benefit is difficult to quantify into dollar terms.
I would guess each manual deposit costs the banks more than $2. Think of all that has to happen. Not only does a teller have to handle the transaction, but after you leave, how much additional work goes into that deposit? They have to verify funds from the issuing bank, mail the check back to the issuing bank (which may or may not get sent back to the company), handle bounced checks if necessary, etc.. Huge hassle. DD is much easier and cheaper.
I used to sort checks as a summer job when I was in school. I would work 60-70 hours a week and gross $700-900 bucks a week sorting those damned checks. I hate I Hate I HATE papercuts.
Is there an echo in here? Seems several people are restating the same things that have already been mentioned....
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