TCF Restores Free Checking for All Customers

The bank, which previously imposed a monthly maintenance fee for customers who didn’t meet certain requirements, has returned to an earlier policy of offering free checking to all customers.

TCF National Bank, which pioneered free checking two decades ago, said Wednesday that it will once again offer free checking to all customers, as the bank attempts to woo customers from other banks that charge fees or limit eligibility for free accounts.

TCF Bank, a subsidiary of Wayzata-based TCF Financial Corporation, in January 2010 began charging a $9.95 monthly maintenance fee, in part to make up for revenue that it expected to lose as a result of new regulations. Those rules prohibit banks from automatically assessing overdraft fees when customers have insufficient funds in their accounts and allow such fees to be imposed only if customers opt in to overdraft protection.

The company in January 2011 reintroduced free checking by eliminating maintenance fees for customers who deposited at least $500 into their checking account each month, completed at least 10 transactions per month, or had at least $2,500 in bank accounts (including savings).

Wednesday’s change eliminates those requirements. TCF spokesman Jason Korstange told Twin Cities Business that TCF still charges fees for a few specialized accounts—for example, certain accounts for senior citizens, which offer higher interest rates—but “more than 95 percent of our personal checking accounts are now free.”

“Almost all other banks, especially large ones” have qualifications for free checking, Korstange said. He also pointed to JP Morgan, whose chief executive was recently reported to have said that most customers with less than $100,000 in deposits and investments will be unprofitable for the bank due to lost revenue from new regulations.

“We’ll take the customers that those banks don’t want,” Korstange said. “We’re happy to do that.”

Whether customers will defect from other banks and join TCF is yet to be seen, but Korstange predicts that the bank will see an uptick in new accounts and a decrease in attrition. He said, however, that TCF didn’t see a major jump in checking customers when it began offering free accounts to qualified customers last year.

TCF hopes to use increased deposits from new checking customers to help fund its growing auto and inventory finance businesses, Korstange said. And the bank expects that by 2013, new business generated by free checking will have offset revenue lost from the elimination of maintenance fees—in part because more checking accounts mean more revenue from other fees, like ATM fees.

Korstange acknowledged that by opening up free checking to everyone, the bank may attract more unprofitable, less-active accounts, but the bank believes the net effect will be positive. And TCF has taken a variety of recent steps to help offset lost revenue from federal regulations, including those pertaining to overdraft fees, rather than depending on checking accounts to make up for those losses.

“We’ve taken many steps in the first half of 2012, such as restructuring our long-term debt, expanding our lending platform, and optimizing our capital structure to improve the company’s position,” TCF Chairman and CEO Bill Cooper said in a statement. “This reintroduction of free checking is a message to our customers that we are here to listen to their needs and respond in a way that enhances our banking relationship with them.”

TCF Financial Corporation is Minnesota’s second-largest bank holding company based on its assets, which totaled $19 billion as of December 31.