The perks are disappearing for PNC Bank customers with free checking accounts.
The Pittsburgh-based bank began notifying account holders Tuesday that it will no longer give those customers reward points for debit card purchases. The bank will also end reimbursements for fees incurred at out-of-network ATMs.
The changes go into effect Sept. 12.
The new terms are part of PNC's revamped lineup of checking accounts and reflect the industry's struggles to cope with regulations that could dramatically shrink revenue. Bank of America, Citi and Chase have all recently changed the terms on their checking accounts as well, either by hiking fees or imposing new conditions to have monthly fees waived.
PNC Bank, which operates 2,500 branches in 15 states and Washington, D.C., underscored that it will continue offering free checking accounts with no strings attached, such as minimum balance requirements. About 70 percent of the bank's 5 million customers have free checking accounts.
The remaining customers who are enrolled in the bank's "performance account" will continue getting rewards for debit card purchases and will see new incentives to bring more of their business to PNC.
The bank said the monthly maintenance fee on the performance account will be lowered to $10 from $15 starting March 27. And the minimum balance to have that fee waived will be eased to $1,500 from $2,500. Customers can now also have the fee waived if they maintain a total of $10,000 across their accounts or set up a direct deposit of at least $2,000.
The push to hold on to or attract richer customers is seen as critical at a time when new regulations are making lower-income customers less profitable.
Under a cap proposed by the Federal Reserve, the fees banks can collect from merchants whenever customers swipe their debit cards would be slashed by as much as 70 percent. The PNC Financial Services Group Inc., the parent company of PNC Bank, has said it stands to lose up to $400 million a year from the rule.
Meanwhile, another regulation that went into effect last year prohibits banks from charging overdraft fees unless customers affirmatively consent to having such transactions go through. Overdraft fees, which can be as high as $39 per violation, had been an important source of income for banks. PNC projects another $400 million in fee revenue losses from the overdraft rule.
Given the shifting regulatory landscape, it's no surprise that banks are sticking new fees and conditions on checking accounts. Last year, 65 percent of bank checking accounts were free with no strings attached, down from 76 percent the previous year, according to Bankrate. The pullback in free checking reversed a trend of broadening availability that started in 2003.