Banking Blog

Finance Blogs » Banking » BofA backs off checking fee hike

BofA backs off checking fee hike

By Claes Bell, CFA · Bankrate.com
Wednesday, December 5, 2012
Posted: 7 am ET

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?

Follow me on Twitter: @ClaesBell.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
51 Comments
Carr
December 06, 2012 at 2:30 pm

Worst bank ever...I changed and went with a S/L. They (BOA) has a bad habit of floating the days a transaction is processed. So even when your purchased was done say the 5th via debit or credit they will wait several days in their pending status..they rearrange the transactions however they see fit. A form of stacking or some type of algorithm used by their computer system in the hopes of catching you off guard and hoping that you bounce a check, debit payment , or credit payment. Too stressful! Transactions should be posted as they come in, not the way BOA wants to stack or rearrange them!

John Giorgianni
December 06, 2012 at 1:40 pm

BofA and their fees It seems they just love to come up with creative fees. Love to see BOA go under or get bought out.

Pull my business and personal out there I got tired of them making money off of me.

JEFF HIRSCH, CPA
December 06, 2012 at 1:09 pm

I've kept my BOA Checking account active for almost everywhere access to my account with my debit card. There is a $ 16.00 monthly fee when the electronic transactions are below $ 259.00. The problem is that when the account always surpasses the $ 250.00 monthly transaction, for I use it for bill paying, that the $ 16.00 fee is always taken out on the 30th of the month and not returned until a week or so later. I resent them using my $ 16.00 for free, when they change for every outlay of theirs. I would think that the computer system should recognize the processed charges and omit the monthly fee if the minimum amount required is processed.

E. Nusca
December 06, 2012 at 12:57 pm

Go with a credit union!!

Tony M
December 06, 2012 at 12:52 pm

I already moved to a S&L without fees! Why should I have to pay the bank for holding and using my money? Wake up America! If you bounce a check you should pay a fee, but not to write a check or use your Debit card. I haven't stepped foot into my S&L in over two years, and that was to open a new account. Everything else is done electronically. Let's go back to six channels of TV and make it free, how many cable customers would go? There is nothing wrong with free! Television sells advertising and then makes us pay to watch what they have already sold? Only in America!

William
December 06, 2012 at 12:47 pm

changing this weekend

William
December 06, 2012 at 12:47 pm

Changing banks this weekend

Skip
December 06, 2012 at 12:43 pm

Banks make enough money. If they want to charge more, they should first reduce executive bonuses. They pay very low interest on checking accounts and money markets compared to some banks.
I have no dedication to any bank and will move. It is not that time consuming or difficult.

Bill O’Dell
December 06, 2012 at 12:18 pm

Of course the BOA should worry. They already have too many unhappy Customers over their other fees and practices.

J Bond
December 06, 2012 at 11:34 am

C.mon folks. I know some ffes are exhorbitant but where do y'all get off everything should be free? Some of you keep small average balances and bounce checks too and want to gripe