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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.

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51 Comments
Brent
December 12, 2012 at 4:42 pm

With no interest paid on checking balances, it is fantastic that B of A would have the chutzpah to charge for checking services when this money is loaned out at up to 30%. It is unfortunate that their management people bought Countrywide and otherwise made a raft of bad loans that they won't honestly account for years later, but they run the risk of losing many customers if they continue to try and foist new charges onto a wary public. Perhaps B of A should figure out how to improve its operations and integrate its computer systems across states as ways to save money?

bladeflap
December 11, 2012 at 6:18 pm

I'd switch to US Bank. What am I saying, I'm already with US Bank.

khordkutta
December 10, 2012 at 9:33 pm

BofA has least 3 "free" accounts if not more, check the site or place a call

Will
December 10, 2012 at 12:27 pm

It is simple. I am not paying someone else to hold my money no matter how much I am worth.

Billy
December 06, 2012 at 4:35 pm

Credit Union is the way to go

Dave
December 06, 2012 at 4:16 pm

I have closed all my accounts with BoA, except one, soon that one too! When asked why by customer service, I screamed FEES, you idot! You're nickle and dime-ing me too death! Went to a local credit union, much better deal and superior customer service.

Jackson
December 06, 2012 at 3:57 pm

I am in the process of changing to my credit union also.
Had a checking account since 1973 at this bank.
Tired of their 35.00 charge for low balance.
I would like to be treated as a person, rather than how much I have in my account. We all have made bad choices in our lifetime, why keep making a bad situation worse.

angusvansantana
December 06, 2012 at 3:56 pm

J Bond, you must work at a bank! Big Exec? Banks make money off every penny of every customers money every single day. They should be paying us $6 to $9 a month to let them make money off our money.

Carol B.
December 06, 2012 at 3:44 pm

I have been a customer of B of A since they moved to Arizona and with the bank they purchased since 1972....... and I'm leaving, they hold my paycheck do not give me access to my money. Yesterday i deposited cash and a B of A check, the money is gone from the other persons account but not been credited to my account yet, they are holding it for processing......how can they hold cash for processing............they charge me for everything and I keep plenty of money in the bank. I use direct deposit and online banking and at times have had both a home and car loan through them..... but they will never get another dime from me. I will gladly go through all the hoops of changing banks to not let this greedy company get any more of my money.

Silver
December 06, 2012 at 3:33 pm

I left Bank of America 5 years ago because of the way they do their banking. I went to a credit union that's supported by its depositors and have had no problems since .If you do not like your bank , check out a local credit union . You will be treated fairly .