Checking Accounts and Banks

Business & Management
#1

Many financial organizations offer low-cost checking accounts. Most big commercial banks have traditionally used checking accounts as loss leaders. A loss leader is a marketing strategy in which a firm sells a product or a group of items at a discount to entice customers. Most banks want to persuade customers to utilize more profitable products like personal loans, mortgages, and certificates of deposit by offering free or low-cost checking accounts.
Alternative lenders, such as fintech businesses, are increasingly offering customers loans, so banks may need to reconsider their strategy. If banks can’t offer enough profitable goods to cover their losses, they could opt to raise checking account fees.