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Banking Interpretations

NYSBL Section 7

To: Senior Examiner Weissman

From: Alan M. Weinberg

Date: February 13, 2006

Subject: Inactivity Fees – [ ] Checking Accounts


Issue

May [ ] ("Bank”) charge inactivity fees on checking accounts? In particular, you asked whether the bank may charge inactivity fees on checking accounts that are

Recommendation

Yes, the Bank may charge inactivity fees on checking accounts, including the particular accounts you asked about. There is nothing in the Banking Law that would preclude the Bank from assessing inactivity fees on checking accounts, but the fees should be disclosed and be consistent with account documentation.

Background/Reasoning

The Bank, being aware that Section 7.2 of the Banking Law restricts inactivity fees on savings accounts, asks whether there are any comparable provisions that would restrict the charging of inactivity fees on checking accounts. The answer is no. There are no provisions of New York law that would restrict the charging of inactivity fees on any checking accounts, including the particular accounts you asked about and, therefore, the Bank may charge inactivity fees on checking accounts.

As a cautionary note, however, the bank should disclose the amount of the fee to be charged and the terms and conditions under which it will be charged. Also, the fee should be consistent with account documentation provided to the customer.

Noted__________

S.A.K.

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