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GreenBank is one of the community institutions advertising its free checking.

Big banks are beginning to make good on their threat to charge fees for everyday checking accounts. But most banks aren’t big banks. And those community institutions are hanging on to free checking as long as they can, hoping to lure away some disgruntled customers.

The news from banks like Regions and SunTrust is arriving by mail across the state.

“Let’s see what we got,” says James Miller of Bellevue, as he closes his mailbox.

Big banks are putting in writing what people have heard was on the horizon for a year or more. Free checking account is about to cost customers. The research firm Moebs Services found two-thirds of the country’s largest banks no longer offer free checking.

“You get a letter like that, especially on top of getting letters throughout the years where they reduce the number of times you can come into the bank, all these little things that kind of add up over 10 or 15 years. You finally get to the point where yeah it’s like yeah it’s only $3 a month, but jeez freaking Louise it’s $3 a month,” Miller says. “Every couple of years you’re changing something and taking something away.”

After getting word that Wells Fargo was charging monthly debit card fees in some states, this musician and graphic designer marched his business accounts to a much smaller bank across the street – First Tennessee.

“You gotta change all your direct deposit stuff,” Miller says. “I mean it’s a hassle, but man you can only take getting stuck so many times before you’ve had enough.”

Seeing an Opportunity

Community banks see a window of opportunity with people like Miller. Franklin-based Southeast Financial Credit Union is putting up billboards around Nashville, and sending out letters that proclaim “free checking is alive and well.”

“This is when it’s happening,” says Lisa Reitmeyer, Southeast Financial vice president of marketing. “This is when it’s important and a hot issue, so this is when we need to let people know. Before, everybody had free checking.”

But checking has never really been free, says Tim Amos, general counsel of the Tennessee Bankers Association.

“It may be free to the customer,” he says. “But it’s not free to the bank that offers the service. Someone is paying for the service and always has been.”

For years, Amos says, debit card fees charged to merchants paid the way for our checking accounts. But the recently passed financial reform bill cuts those so-called interchange fees by half, at least for the big boys.

“Remember it only applies to banks over $10 billion in assets, which is certainly all of the larger banks, but it doesn’t apply to those banks under $10 billion in assets, which is the vast majority of banks,” he says.

Risk of Raising Fees

Amos says maintaining higher merchant fees for the time being helps community banks keep free checking around. But in some ways, they can’t afford the risk of raising fees like big banks can.

Southeast Financial executive John Jacoway says it would be much harder to recover if customers leave in droves.

“We’re not able to go out and get any person walking down the street to become a member of our institution,” he says. “We’re not on every corner across the nation. So each person, each member – if you will – is much more important to us.”

If community bankers can steal some unhappy customers from larger institutions, Sam Allen says they can make free work. Allen is with Mississippi-based Renasant Bank which has been promoting its “no charge” checking.

“By generating more good, core checking accounts, that’s how we can generate additional fees for the bank,” Allen says.

A survey by Bankrate.com shows most Americans are willing to walk over new fees. Some will take their money to community banks. Others are going to extremes.

Waiting at a Nashville bus stop, Karen Rowlette says she scrapped Bank of America, closed all of her bank accounts, and now has her paycheck deposited to a Walmart card, which functions like a prepaid debit card.

“In today’s recession, every little bit counts,” she says.

With all the new nickel and diming, Rowlette says cash may even make a comeback.