[stult]

Historically, retail banks made their money off of the spread between their loan interest rate and the rate they pay out on deposits. So they borrow from your deposits at 2% and loan it out at 5%, pocketing the 3% difference. Over the past 20 or 30 years, extremely low interest rates and competition with money market funds and other more complex savings vehicles have reduced depository interest to essentially nothing, which sets a ceiling for the spread. So for a bank to make money off a regular joe who doesn't have enough money to access investment banking services, they need to charge fees to make a profit. For example, if you have an average $1000 in your account, the bank may only make $10 off of that in a year. Many lower end clients, the ones who tend to pay high fees for overdrafts, have even less money than that deposited on average. Also it's worth pointing out that most banks charge withdrawal fees only if you use another bank's ATM. It's entirely possible to have a checking or savings account at a bank and never pay significant fees if you don't overdraft or drop below minimum amounts. Of course, those issues tend to affect poorer customers disproportionately, but it's not without reason even if it is problematic socially.

[dmurray]

> So they borrow from your deposits at 2% and loan it out at 5%, pocketing the 3% difference. Over the past 20 or 30 years, extremely low interest rates and competition with money market funds and other more complex savings vehicles have reduced depository interest to essentially nothing, which sets a ceiling for the spread.

It sets a floor for the spread, not a ceiling. All else being equal, the bank should make more money when the amount of interest it has to pay its customers drops.