Like the nickel candy bar and the Edsel, the cost-free (to depositors) small savings accounts offered by banks soon may be little more than a memory of the so-called "good old days."
Citing the higher costs of maintaining regular savings accounts, banks increasingly have adopted pricing structures requiring customers to pay a fee when those accounts fall to a given level or when withdrawals occur with frequency.
Most banks in metropolitan Washington continue to offer maintenance-free savings accounts, but several are evaluating the practice, possibly with the idea of going to a fee system before long.
When American Security Bank, the District's second-largest, instituted a fee structure for savings accounts in 1976, the decision not only irked some account holders, it prompted competitors to tailor their advertising to the availability of accounts without fees.
When asked by The Washington Post then if Riggs National Bank contemplated the assessment of similar charges for maintaining small savings accounts, chairman Vincent C. Burke replied, ". . . We have not, do not and will not" consider such fees.
In the interim, however, Riggs gradually concluded that it had little choice but to join the trend in adding service charges.
Thus, beginning April 1, owners of individual and corporate savings accounts at Riggs will have to adhere to a schedule of maintenance charges and withdrawal fees.
"We probably should have done it a couple of years ago," says Riggs President Daniel J. Callahan III. "The operating costs have skyrocketed for those small accounts."
About half of Riggs' 100,000 savings accounts have average balances under $500, Callahan said. Those are the most active accounts, "and we feel that we have to start charging for servicing those accounts," he continued.
Under the fee structure adopted by Riggs, there will be no maintenance charge for savings accounts with average balances of $2,000 or more. Unlimited withdrawals, with no fees attached, may be made from those accounts.
Savings accounts with average quarterly balances of $500 to $2,000 also will be free of maintenance charges. However, only three withdrawals may be made without charges in a quarter. Each withdrawal over three will cost $2.
Accounts with average quarterly balances of less than $500 will be assessed a charge of $6. For each withdrawal over three during a quarter, the account holder will be charged $2.
Further, Riggs will charge $10 for savings accounts that are closed within six months after they are opened.
Depositors under 21 and those 65 and older will not have to pay a maintenance charge; however, their accounts will be assessed for withdrawals.
Savings accounts at most banks have declined in recent years because depositors increasingly are turning to instruments that offer them higher yields than 5 1/4 percent on their savings. Indeed, Riggs' savings deposits are "off maybe 25 percent" from totals of previous years, Callahan said.
Besides investing in such instruments as money market funds and certificates of deposit, some depositors have taken advantage of the NOW (negotiable order of withdrawal) accounts by consolidating their checking and savings activities, he added.
And with "excessive activity" in small savings accounts, he said. "We really can't afford to offer them free," he said.
All banks are under pressure to examine their costs, observed William Daiger, executive vice president at Maryland National Bank, which charges no fees on savings accounts. However, "Our posture right now is one of not alienating our customer base but of attracting customers," Daiger said.
Virginia National Bank charges no maintenance or withdrawal fees, "but the situation is under constant study," a spokesperson said.
At Suburban Trust Bank, savings account customers are required to pay $2 if the average balance falls below $100 during a statement period and a like amount if an account is closed within 90 days after being opened.
Suburban has no plans to institute any changes, but "I wouldn't rule anything out for the the remainder pf the year," said Wayne M. Proctor, a vice president at the Hyattsville-based bank.
Security National Bank in the District also charges for some withdrawals, but the fee is only 50 cents for each above six during a quarter. Security also charges a depositor $3 if a savings account is closed within six months after opening it.