Jane Customer banks at ABC Bank and has a "Super Free Direct Deposit Account". As long as Jane has a direct deposit into her account, there is no fee to hold the account and no minimum balance required.

Jane Customer has a direct deposit of $500.00 the 1st and 15th of every month. Jane comes into ABC Bank on the 2nd and 16th and makes a withdrawal of $500.00 each time, brining her balance back down to zero.

Can we close this account? Jane Customer is within our bank's guidelines, however, Jane writes no checks off the account, never uses her debit card, just basically uses ABC Bank as her 'check cashing' bank.

If you impose any negative restrictions on Jane regarding this activity, you open yourself to a discrimination lawsuit. If you want to bankrupt your bank, go right ahead.

This is a classic example of "be careful of what you ask for." Jane is providing you exactly what you require of her to get the free account. When banks come up with this sort of promotion, they need to think like the consumer who is looking for loopholes, and then close those loopholes, or they get what this bank got.

I'd recommend redesigning your account requirements, giving your customers the appropriate 30-day advance notice, and watch what you might term "freeloaders" start to either walk or start paying their way.

It occurs to me that checking accounts, especially free ones, have always tended to be the "loss leaders" of a bank's marketing strategy. It's like when your grocery store sells milk at a sale price lower than their own cost, then shelves the milk all the way in the back, hoping that you'll see a whole cartload of things you "need" at normal prices on your way in and out. They're trying to take advantage of your need for milk, and hoping you don't take advantage of their marketing strategy.

When customers start making that long walk to the dairy case, grabbing a gallon of milk, and checking out without making a single other purchase, stores have the option of putting fine print in the ads for the next sale: "with minimum $10 purchase." Or, they can assume that even the "milk-only" customers are getting a good look at what the store has to offer, and will eventually build an ongoing business relationship.

Your call, for future offers. But grabbing the milk out of the hands of every person who takes advantage of your marketing strategy tends to make you look unattractive. I don't recommend it.

Besides, how much of a drain is this person? True, she's not keeping money in the bank long enough for you to lend it out at interest, but that's true of all demand deposit accounts. She also isn't using up the time of, for example, your check order department, item processing, signature verification, etc.

Could you call it a draw?

FraudBuster is right, of course. A knee-jerk reaction to plug the loopholes may not be the correct course when you look at your bank's overall strategy.

I am reminded of a discussion many years ago when the bank I was working for was trying to "weed out" non-profitable checking accounts. We realized then that if we managed somehow to get rid of the bottom 20% of those accounts, a new bottom 20% would perforce appear. There are fixed costs involved in the operation that have to be spread over all your accounts, and there will always be accounts that on paper appear to be "losers."

My thought on this is...
people tend to go where they have their checking account first when another financial need arises.
She's more than likely going to need a new car or home eventually (car loan or mortgage opportunity). Besides...she's an excellent opportunity for your staff to cross sell.
Do you offer free bill pay? Does she have a credit card through your bank?

In my past life, I dealt with a lot of these customers, and found them to be more of an opportunity in the future than a drain on the present...
JMO...