Debit Card and Online Banking Inactivity Fees

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Question:

Our Retail Division is getting very creative in coming up with fees that we have not charged in the past. I understand that dormant/inactivity fees are defined at the State level and are allowed on accounts advertised as "free." Would the same hold true for debit card inactivity and/or online banking inactivity fees? Would these fees be allowed on "free" accounts if properly disclosed? I have the same question for return mail fees.

Answer:

I would put an inactivity fee as you described them in the same category as a dormant account fee and say that it does not impact an account being "free" in advertising. These are not fees for use, but rather because the bank has servicing responsibilities and no use of a product can be worse than use.

I would encourage the bank to justify the fees with costs. Examiners have never liked fees that result from greed.