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Promoting Checking? Look Before You Leap

If your financial institution is looking to acquire new checking accounts, you’re not alone. Most of your competitors are too. It’s not hard to figure out why. The typical checking account generates about $150 annually in fee income, so it makes all the sense in the world to actively promote checking accounts to prospective account holders.

But …

Checking accounts come in lots of flavors with a variety of features. What type of checking account should you be promoting in your marketing efforts?

The two charts below, from BankRate.com, should help.

Minimum Daily Balance Required to Avoid Fees

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Yikes! Never mind that the balance requirement has more than doubled in the past decade, the more important point is: Who keeps that kind of money in their checking account?

A Bankrate study last year found that nearly half of Americans could not afford an emergency payment of $400. Yikes! Yikes! Right out of the gate, the numbers show that if we were to promote our interest-bearing checking accounts, our target market would be left on the cutting room floor.

Average Yield on Interest-Bearing Checking Accounts

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Adding insult to our research, the average rate of return at the end of last year was just six basis points. Yup, a whopping six basis points.

Promoting interest-bearing checking accounts that pay a blip over zero isn’t going to appeal to consumers who can afford to keep a $7,000 minimum daily balance.

The numbers speak for themselves.

If you’re planning to obtain checking accounts you would be best served promoting your free checking product or a checking account that allows account holders to avoid a monthly service fee.

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Harland Clarke Corp. is a leading provider of best-in-class integrated payment solutions and marketing services, serving multiple industries including financial services, retail, healthcare, insurance, and telecommunications.

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