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Free checking used to be almost ubiquitous at American banks. But those days are over.

In 2009, more than 80 percent of banks offered free checking. Now, it’s down to around 60 percent, according to economist Michael Moebs, who runs a research firm called Moebs Services. He surveyed almost 2,900 banks about free checking.

"We’ve seen probably the steepest decline that I’ve ever seen, in any major financial service, ever," says Moebs.

Checking accounts are almost never profitable for big banks. And new regulations have driven up costs for the banks.

"The cost to operate a checking account is very expensive. On average, it’s about $380 a year," says Moebs.

The big banks did the math. Moebs says: "They decided to get out of free checking because they couldn’t make any money in it."

Well, it is called free checking.

"Free checking is a bit of a misnomer," says Bob Meara, an analyst with the research firm Celent. He says banks have used free checking as a kind of loss-leader to get customers in the door and sell them other services.

But since the Great Recession, customers haven’t been buying as many services. And new regulations have limited bank profits on things like credit cards and debit cards.

"Banks responded by increasing the per incident fees. So, overdraft fees grew to over $30 an incident," says Meara.

Free-checking still exists. But it helps to be a preferred customer.

"Banks will position lower costs – ostensibly ‘free-checking’ – for consumers who don’t consume the more expensive aspects of service delivery," says Meara. "And charge other consumers a bit more who represent a greater cost."

If you want to avoid some fees, you might try a community bank or a credit union. Their cost structure is lower than the big banks, so they are more likely to offer you free-checking.

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