Bank of America: No More Free Checking for Customers With Low Balances
January 22 2018 - 8:25AM
Dow Jones News
By Rachel Louise Ensign
Bank of America Corp. has eliminated a free checking account
popular with some lower-income customers, requiring them to keep
more money at the bank to avoid a monthly fee.
This month, all remaining eBanking customers with the Charlotte,
N.C., lender were switched into accounts that charge a $12 monthly
fee unless the customer has a $250 or more direct deposit or a
minimum daily balance of $1,500 or more. Other eBanking customers
were switched over as early as 2015.
Some customers are unhappy about the move: A petition protesting
the change has garnered more than 45,000 signatures on
Change.org.
James Prather, a 32-year-old freelance writer from Tampa, had
one of the accounts for years until the bank switched him out of it
on Friday. Mr. Prather earns less than $20,000 a year and doesn't
get paid through direct deposit, so he expects to be charged the
monthly fee. He wants to avoid that expense, so is hoping to move
his checking account to a credit union that doesn't charge a fee.
"I'm such a budgeter. Being poor, you have to count every dime that
you have," Mr. Prather said.
The eBanking accounts were first introduced by Bank of America
in 2010 when the bank was starting to encourage customers to do
more business on their computers and phones. The accounts had no
monthly fee so long as customers didn't use a bank teller for
routine transactions and agreed to receive their statements online.
At the time the product was introduced, customers were charged an
$8.95 monthly fee if they used these services. Bank of America
stopped offering the product to new customers in 2013. But those
who already had the account were allowed to keep it.
The second largest U.S. bank by assets, Bank of America under
CEO Brian Moynihan has transformed its consumer business, reducing
the number of products available and encouraging customers to keep
their main checking account with the bank. The lender has also cut
its branch network, focusing on major urban areas instead of less
profitable rural locations. The changes have made the bank's
consumer business more efficient and profitable, helping push Bank
of America's stock price higher.
"For anyone who chooses us as their primary bank relationship,
with a direct deposit of just $250 [per] month or $3,000 [per]
year, they'll get full access to all of our financial centers,
ATMs, mobile and online banking," a Bank of America spokeswoman
said. "That's a great value and our client satisfaction scores are
at all-time highs."
The bank has a checking account geared toward lower-income
customers, which has a monthly $4.95 fee and doesn't allow
customers to write paper checks or overdraw their account, which
typically comes with a large fee.
Banks have long grappled with how to charge customers for basic
checking services. The accounts are costly for banks to maintain,
though they do bring in revenue through overdraft and other
fees.
Bank of America in 2011 also faced a backlash when it planned to
charge a $5 monthly fee for making purchases with a debit card. It
eventually backed off the plan.
Write to Rachel Louise Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
January 22, 2018 08:10 ET (13:10 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Bank of America (NYSE:BAC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Bank of America (NYSE:BAC)
Historical Stock Chart
From Sep 2023 to Sep 2024