A little more than a year since the original bank transfer day protest took aim at Bank of America's controversial debit card fee, it looks like the megabank is backing away from another checking account fee increase.
Since early last year, Bank of America has been running a pilot program in Arizona, Georgia and Massachusetts. Customers in those states have been charged a flat monthly fee of $6 to $9 for basic checking services, and the idea has been that if the experiment worked, it could be rolled out nationwide.
But the bank looks to be putting the fee increases on hold for now, writes Shayndi Raice and Robin Sidel in The Wall Street Journal:
Bank of America Corp. has shelved plans for new fees that could have hit at least 10 million customers by the end of this year, skirting a potential replay of a 2011 uproar over consumer-banking charges.
The decision to hold off on new checking-account fees at least until late next year comes amid a sweeping review of the bank's retail-banking business, said people familiar with the bank's plans.
While checking fees are obviously nothing new, what's unique about BofA's Essentials account is that it charges an unavoidable flat fee for basic checking. Most megabanks have imposed a monthly maintenance fee in the last few years, but they've also offered some kind of path to avoid it, such as by keeping more money in your account, signing up for direct deposit, etc. While Bank of America is still offering accounts with those kinds of fee waivers, even in the states running the pilot program, customers who chose an Essentials account have had to pay the fees, end of story.
From BofA's point of view, having to tiptoe around fee increases must be a little odd. It wasn't that long ago that people essentially didn't care about banking fees, and it's probably strange that charging money for delivering an important service would be a hot-button issue. But customers have been conditioned to expect free checking, and getting people to pay for something they're used to getting for free can be really hard. Just run over to your local newspaper and ask how their online paywall is going.
That's why I think Bank of America's caution is warranted. Thanks to the Dodd-Frank Wall Street Reform and Consumer Protection Act, and changes in Regulation E, more transparency in checking costs may be inevitable. But it doesn't seem smart for Bank of America to take the lead here. The backlash from the company's $5 debit card fee debacle is still a little too fresh, and it's smart for BofA to wait for other megabanks to make similar checking changes so it has a little cover if it wants to move forward.
Sure, the bank will lose some customers to higher fees, but most customers will stick with BofA because changing bank accounts takes a little more legwork than a lot of people are willing to do to save $6 a month.
What do you think? Should Bank of America be hesitant about raising fees on customers? Would a $6 to $9 per month fee make you switch?
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