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Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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New Rules and Technology Shape Bank Services

July 2011 effective date

Banks are phasing out “no strings attached” free-checking accounts in response to new federal rules, but are offering new products and services to remain competitive and meet demand for mobile services.

Many bank customers will benefit from the new offerings, but others will be priced out of traditional lending institutions and join the ranks of the “unbanked.” Big box retailers are stepping in to meet the needs of the unbanked and may pose a competitive threat to traditional banks.

New fee structures stem from the Dodd-Frank Wall Street Reform and Consumer Protection Act. Rules set to go into effect in July 2011 cap the fees banks can charge on debit card transactions. The fees are a significant source of revenue for banks and earn an estimated $17 billion each year. Another important source of income, revenue from overdraft fees, has also declined as a result of the Dodd-Frank Act.

A checking account costs between $150 to $200 to open, and between $250 to $300 a year to administer, said Jim Chessen, chief economist for the American Bankers Association on www.americanbanker.com. “I think it gets very difficult to make up for the loss of that revenue without going to charging by account or having minimum balances or limits on debit card use.”

Banks are considering annual fees of up to $30 for debit cards, eliminating debit card rewards, limiting debit card transactions, increasing ATM fees for non-customers and raising penalty fees for failing to meet a monthly direct deposit minimum, said William Alden on www.huffingtonpost.com.

Banks are also paying more attention to managing relationships to retain valuable customers, investing in training programs to make employees as effective as possible, testing online advertising campaigns and offering mobile services. Many banks will continue to offer “free” checking to consumers who agree to keep a minimum balance or to have paychecks directly deposited to their account, said www.americanbanker.com. Some customers may receive free checking for taking out a mortgage with the bank.

Consumers are craving simplicity and transparency in their dealings with banks, according to a survey by the brand strategy firm Siegel+Gale reported in www.americanbanker.com.

They are increasingly shopping for and switching to new primary banks, according to the 2011 U.S. Retail Bank New Account Study released this month by J.D. Power and Associates.

“These customers appear to be more discriminating and diligent when selecting a new bank,” said Rockwell Clancy, vice president of the financial service practice at J.D. Power. Customers are most likely to change accounts because of a change in life circumstances, but fees and poor service are also driving them away.

Financial columnist Jean Chatzky in an article on www.walletpop.com recommends consumers considering a change in banking services:
• Consolidate accounts to meet balance requirements.
• Understand the “terms, conditions and disclosures” on your account.
• Comparison shop and calculate the trade-offs. Consumers may get free checking in exchange for higher ATM fees or minimum balance requirements. It’s important to understand what each account would cost you.