Fewer Freebies

Big-city banks get tougher

American banks have long tried to court depositors by cultivating a magnanimous image. They have distributed millions of free checkbooks, given away innumerable lollipops and balloons to children and charged only nominal fees whenever good customers accidentally wrote bad checks. That generosity was fostered by Government regulations that for many years have put a limit of 5 1/4% or less on the interest that commercial banks could pay on passbook savings accounts.

Now the Government has begun phasing out interest-rate regulations, and customers are moving away from passbooks into higher-yielding accounts. Banks must thus pay more for their deposits, and profit margins are being squeezed. As a result, many big-city banks are becoming more hardnosed. New York's Chemical Bank last week began imposing a quarterly $4 fee on savings accounts that fall below an average of $400. The First National Bank of Chicago used to help customers balance checkbooks for free. Now it charges $15 for the first hour of aid and $10 an hour after that. The Arizona Bank in Phoenix has raised the minimum balance required to avoid service fees on its interest-bearing checking accounts from $ 1,000 to $ 1,500.

The Girard Bank of Philadelphia has completely overhauled its fee structure with an innovative plan designed to relate the service charges a customer pays to how often he uses the bank's facilities. Each depositor is given a monthly "credit," or allowance, depending on the size of the average balance in his account. If the amount is $1,000, for example, the credit is about $11. The customer incurs a charge against that credit when he uses the bank. Writing a check costs 30-c-, and a withdrawal from an automatic teller machine is 10-c-. For a bounced check, the bank demands a daunting $30. If the customer's monthly charges exceed his credit, he pays the difference as a service fee. If, on the other hand, he does not use his account too often, he pays no service charge.

Banking experts believe that Girard's system of fees is a prototype that may be widely copied. Surveys show, however, that a majority of small- and medium-sized banks are still skittish about sweeping new charges that might alienate customers. A study by Sheshunoff & Co., an Austin consulting firm, indicated that only 48% of U.S. banks have adopted maintenance charges for credit cards. More than 80% of the banks impose no fees on small savings accounts, and 75% offer free checking to senior citizens. Smaller banks are still looking for little ways to be generous. The Princeton Bank in New Jersey, for example, not only offers lollipops for children but also, at one drive-in branch, gives dog biscuits to their pets.

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