Riva Atlas reports on how banks make money on free checking accounts.
Banks make money from free-checking customers in three ways. Because such accounts generally pay no interest, they provide a cheap source of money for the banks, which can then reinvest the money elsewhere, Mr. Stein said. The banks also use the accounts to attract new customers who will then buy their other products, like insurance or mortgages. Banks also charge many fees, particularly for covering bounced checks.