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If you value your free checking account, now might be the time to join millions of Americans who are switching banks. The nation’s largest banks are abandoning the concept of free checking, leaving small banks and credit unions to pick up the slack, according to a recent study by Moebs Services, a banking industry research firm.

“It is a mass exodus,” Mike Moebs, CEO and economist at the company, said of consumers fleeing the major banks.

As recently as two years ago, 92.6 percent of the nation’s largest banks (those with assets of $50 billion or more) offered free checking accounts. By June 2011, that number plummeted to 38.5%.

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Consumers are registering their displeasure with their feet. The big banks lost four million checking accounts last year, Moebs says. This year they’re on track to lose another 10 million. In 2009, big banks like Citi, Wells Fargo, Chase and Bank of America, controlled 45% of the 130 million checking accounts in America; by last quarter that share had dropped to 35%.

“It’s clear” that major banks “are going to get out of the free checking business,” Moebs says in the release.

Why would banks be willing to sacrifice so many customers? Because checking accounts don’t earn them the profits they once did, Moebs says. Between new regulations limiting their revenue from debit card swipe fees, and other rules restricting how much they can charge for overdraft and other fees, big banks may no longer be able to afford to provide services to regular people, Moebs says.

[Related article: Need a Checking Account? Prepare to Get Tight With Your Bank]

The major banks “just can’t afford the single service household, or small-time consumer,” says Moebs. “When you are beyond your economy of scale, you must reduce costs or get out.”

What’s bad news for big institutions could be great news for smaller ones. The number of credit unions offering free checking accounts increased by 5.1 percent over the last year, Moebs finds, while the number of community banks offering the service declined by just one percent.

“Community banks and credit unions are welcoming the millions fleeing” the big banks, Moebs says. “This is a big opportunity to gain market share for the friendly Main Street financial institutions.”

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Image: Heidi Elliot, via Flickr.com

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