First Chicago NBD Corp. said it would halve its controversial $3 teller fee on all but one type of checking account and roll out a new account with no teller charge at the end of the month.
In a letter sent to customers of First National Bank of Chicago and NBD Illinois last week, the company said it would reduce its teller fee to $1.50 on two types of checking accounts and on savings accounts, and begin providing a new no-teller-fee checking account. The bank also said it would eliminate teller fees for money market accounts beginning April 29.
Of five checking accounts, only one - the self-service account, which is the least expensive and requires no minimum balance - will retain the $3 teller fee. Two other accounts, one for seniors and another for customers with large balances, never charged for teller use.
The move is the first sign that First Chicago, which merged with NBD Corp. of Detroit on Nov. 30, is backing away from a policy that became a public relations nightmare last April.
The fee was never applied to NBD accounts in Michigan or Indiana.
The change coincides with the conversion of 14 NBD branches to First Chicago branches. Another 54 NBD branches will be converted late in July.
Rockwell Clancy, executive vice president of the Bank Administration Institute, said he believes the bank reduced the fees because it feared losing NBD customers. A BAI survey of bank customers showed that more than 80% indicated they would leave their banks if teller fees were instituted.
But First Chicago officials said the loss of customers as a result of the fee has been minimal.
First Chicago announced the teller fee in an effort to encourage customers to use automated teller machines and telephones.
The move was greeted by a maelstrom of public criticism and jokes. First Chicago officials defended the strategy, saying it would change customer behavior. Now, 80% of all First Chicago customer transactions are completed by phone or ATM, the bank said, compared with 75% a year ago.
"This whole thing helped us in the long run," said James Lancaster, executive vice president and head of Illinois retail.
Smith Barney analyst Henry "Chip" Dickson explained the new, lower fee this way: "Maybe they achieved what they wanted to. The reality is people are willing to use other delivery channels if they don't cost as much, but sometimes they need encouragement."
