Don't Quit Your Day Job…

Well, probably not the death of free checking accounts, but a little hyperbole never killed anyone, right?

DQYDJ already gave you a “view from 35,000 feet” analysis of new debit card transaction caps in our last article, but we wanted to follow it up with something deeper, for those interested in how the sausage is made. We’ve dug into two of the more recent Bank of America investor releases and are ready to share our thoughts on why Bank of America’s move is rational – and you can expect other banks to follow. Yes, likely even online banks and credit unions. However, first up is Citibank, who is eliminating free checking… unless your account is over $6,000.

Here’s an interesting move on the part of Bank of America… account holders who use their debit card at any time during a month will be expected to pony up $5.00 at the end. The fee doesn’t apply if you use your debit card at ATMs, just when you use it to make purchases. It’s just the latest of the big banks to make waves with debit card fees – and, with the fee scheduled to roll out to Bank of America account holders next year, it’s the largest of the debit card fee programs. Wells Fargo and JP Morgan Chase are also toying with the idea to tack on monthly debit card fees.

Even though I lifted the moniker from this article on CNN Money, the scare quotes are appropriate. I’ve written about the Credit Card Act of 2009 and its unintended consequences. Lucky for you, the law is starting to bear fruit. We’ve seen issuers who offer cards with 79.9% interest rates, at least this article features a few cards with redeeming qualities. Anyway, you can tell the title is a bit tongue in cheek, but let’s tackle the features in the three cards shown.

One of the provisions for receiving government funds through TARP caps executive salaries at $500,000. Companies argue that setting caps in that way leads to a talent drain – top employees who can receive a greater salary elsewhere will go do that. These predictions are coming true; TARP companies are losing talent to boutique firms that don’t have compensation limits. Is this the best effect on companies trying to pay back public money?

Rortybomb, a blogger and financial engineer from San Francisco posted an interesting spreadsheet based on the stress test results. Hunting through the stress test results, he found a chart on page 6 with ‘Baseline’ and ‘More Advanced’ numbers. Since that’s enough to do a linear extrapolation (of course, with two data points that probably isn’t the most accurate way to do it… see his background post) allowing you to set your own estimate for worst case unemployment numbers. Read on…