Incredible Bank has sent an email to its checking account customers informing them of a new monthly maintenance fee that will take effect on June 1, 2013. In summary, checking account customers will have to maintain a minimum balance of $300 to avoid a $15 monthly fee. Thanks to the reader who forwarded me the email he received. Below is an excerpt of that email:
IncredibleBank, a division of River Valley Bank, is committed to providing our customers with the latest technology while maintaining competitive pricing. Periodically it becomes necessary to change our pricing structure. A maintenance fee of $15.00 will be assessed on your Incredible Internet checking account if the average collected balance falls below $300.00 during a statement cycle. This will become effective on June 1st 2013.
We know having your account information at your fingertips is important to you, which is why we offer free online services which include BillPay, e-Statements, account/item alerts and Mobile/Text banking.
Thank you for your continued business! We appreciate the opportunity to provide your banking services. Please feel free to contact your IncredibleBank Trainer Monday thru Friday 8:00 am to 5:00 pm CST at 877.261.4750, if you have questions regarding your individual needs. We always welcome suggestions for improving our service to you.
I called Incredible Bank this morning, and I confirmed this new fee will apply to all checking account customers. This might affect customers who had opened this checking account just for the high rate. They may have moved most of their money into other accounts that have higher rates. Those other accounts might not just be at other banks. It may include Incredible Bank’s money market account. If they’re not paying attention to their accounts, they could be in for a surprise for them when they finally notice the fees hitting their checking accounts.
I asked the Incredible Bank customer service rep what would happen if someone had a balance under $15 in the account when the fee hit. I was told the bank would zero out the balance, and the account would be closed. I was also told that the bank would not bill you for the remaining amount owed or consider that amount to be an unpaid fee which would be reported to ChexSystem. The last thing a saver wants is to have a bank ding your ChexSystem report which could prevent you from being able to open accounts at other banks.
This shows why it’s a good idea to stay on top of all you bank accounts, even those with small balances that aren’t used. If you can’t stay on top of those accounts, it’s better to close them.
Reason for the New Fee?
This raises the question about why Incredible Bank is adding this fee. Is it hoping to bring in more fee revenue? That will come with a price of angry customers.
Are these low-balance customers costing Incredible Bank? The email and the customer service rep suggested that is the main reason for this new fee. I was told by the CSR that there is still a cost for maintaining low-balance accounts, and according to the CSR, they have accounts with balances of only pennies. However, it seems like there shouldn’t be much cost for maintaining internet accounts. There are no paper statements, no paper checks, and no 1099s.
Perhaps Incredible Bank is hoping to increase the number of active checking account customers. I would guess that most checking accounts with balances under $300 are probably not being used. One way a bank can make money from active customers is through debit card purchases. There’s an interchange fee for each debit card purchase that you make. This interchange fee is paid by the merchant and goes to the bank. This helps pay for the high interest rates of reward checking accounts. Even though Incredible Bank doesn’t require debit card purchases to qualify for its high interest rate, it may have planned on a significant percentage of its checking account customers using the debit card. That percentage may be lower than it had planned.
We have seen other internet banks adding monthly maintenance fees. One old example is Amboy Direct which added a $5 monthly fee on its Premium Savings Account for balances under $100. This was back in 2009. If you know of more recent examples of internet banks adding monthly maintenance fees, please leave a comment.