Why You Could Pay for Your Next Checking Account

Tired of overdraft fees? Sick of ATM charges? Of course you are. So here's Probity, a Texas-based bank that promises to treat you better. But there's a catch. You're going to have to pay for that checking account. And you're going to have to pay every month.

Overdraft revenue racked up a heavy $36.7 billion for banks last year, which is, for comparison, about the same Bank of America had to raise after the stress tests. That number will only increase with banks strapping for cash and looking for ways to collect extra fees without turning away their best customers. As a result, these fees are bound to get only more regressive, since you're more likely to get hit with overdrafts if you've got less disposable income to begin with.

But here's Probity offering an intriguing way out of the overdraft trap by essentially saying: If you don't want to pay more later, pay a little now. Probity CEO Tim Smith describes his bank to the WSJ as "Netflix for your money," which certainly makes it seem like the hip option to other banks' "old-fashioned Blockbuster" methods of relying on overdue fees for revenue from their customers.

The banks' several hundred customers pay $19.95 a month for their account ($240 a year) and in return the bank offers plenty of leeway with delinquency penalties and overdrafts at a time when other banks are moving in a more draconian direction. Smith says that for many people, it "actually significantly reduce the cost of checking for a lot of people whose $3 coffee winds up costing $38 in fees."

The bank covers overdraft up to a limit of $500 depending on their customers' credit, and fees aren't charged for as long as 30 days (the regulatory limit) to let customers pay big bills even if they receive their paycheck at month's end. After 30 days, Smith says, the debit card will be declined.

Not sure what I think about this for me now, but I could have used it as a college kid when I had to go begging to the local US Bank attendant when I routinely racked up exorbitant end-of-semester charges. Maybe pay-to-check isn't a bad option, not only for families Smith spoke of who live on the margin and could use the leeway, but also for kids opening their first checking account and aren't used to thinking about managing their money.