Ask HN: Why are banks charging so many fees for accounts and cards?

1. Payday loan tier. It's very extractive and uses lots of fees and interest because getting a cut of whatever money is there now is all that matters.

2. "Normal" tier. There basically aren't fees for typical services, everything is paid for indirectly via interest rates and card fees or marketing other services. The banks I've used since the 2000s have all been like this.

3. "Premium" tier. At this level there's usually a fee to keep out the "riffraff," like with most AmEx.

Do some normal tier providers have fees? I've seen credit unions where there are fees if you don't meet some threshold of services or usage. Or with some non CU accounts where there's a fee if balances don't stay above a certain level. But that's about it. I've also seen I think once or twice set ups where you had to opt in to things like free overdraft protection, but could get charged for it if you don't. But that seem like the fringes, not the norm.

I'm curious what else is under your "perks" umbrella.

If you want a checking account with no minimums try Ally. EFT payments are also free. You will have to pay for checks however.

Two other thoughts, one speculative/general and one where I know of what I speak:

If you make most of your income off a small group of your customers, then it’s wise the charge some nominal fee on the other customers to get them to breakeven unit economics. (That holds in most any industry, not just finance. Consider the endless think pieces on the problems caused by a high proportion of free users at zoom and Dropbox.) No, you’re not “making big profits” from them, but the point is to make sure your customers aren’t adversely selected. That can mean, “let’s still make something off the people who pay their credit card bill every month.” It can also mean, “overdrafts create manual work in our back office; let’s make sure they pay for themselves and aren’t correlated to our profit margin on the real business, which is lending.”

Area I know more about: for credit cards in particular, don’t underestimate what the annual fee does for the issuer. The psychology of it for the consumer is huge. People will cancel accounts they’re not using, sure. That helps, because forcing unused accounts closed can draw regulatory headaches. But consumers also consider the card more valuable and may be more loyal to it if it costs as much as their Netflix subscription each year. The issuer is making money on other sources—interest, interchange, travel portals, etc. The fee is, for the right type of customer, a kind of marketing device.

The answer's exactly the same as from the famous bank robber who eventually confessed as to his motivation for living the high life on ill-gotten gains using the same institutions:

"Because that's where the money is."