We do not currently do this practice, but a few reasons come to mind:
Free accounts cost the bank more since they are dependent on OD fees, and tend to carry low balances.
Depending on your market, you may be taking on more risk when you offer and promote a Free checking account.
I think most people looking for a free account are less concerned with the OD fee than the monthly charge, which they are looking to avoid. They tend to think that they will not OD, so it will not effect them.
Non-free accounts generally require higher balances or multiple relationships to remain avoid a fee, so in a way, offering a lower NSF to them is a reward for higher balances or multiple relationships. Perhaps this is a way to market or spin the concept.
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