Looks like the heavy snows of the last few months won't be the only blizzards we see this season.
Last week I wrote about how banks will likely raise fees for checking accounts in response to new caps on the fees they can charge merchants for debit transactions. Well, a Wall Street Journal article out this week finds Bank of America preparing to unleash a nor'easter of new fees, and for those of us used to free checking, the news is pretty grim:
According to a person familiar with the plan, the bank will soon begin testing fees of roughly $6 a month on its most basic account. Customers will have no options to waive that monthly fee.
Accounts with more features can have monthly fees ranging from $8.95 to $25. They can be waived if customers maintain certain balances, use credit cards, do their banking online, or have a mortgage with the bank.
The nation's largest bank by assets said it will divide customers into four categories structured by account activity and number of products, according to an internal memo. The four accounts are "Premium," "Enhanced," "eBanking" and "Essentials."
These fees may not sound like a huge deal, but $25 a month is $300 a year -- not exactly chump change. And if you're reading this and saying, "Good thing I don't bank with B of A," it's likely the fee bell is tolling for thee as well:
Bank of America has some sort of banking relationship with half of all U.S. households, its moves are being followed closely by the industry.
Many big banks are experimenting with new monthly maintenance fees and considering additional charges on credit cards and checking accounts as they search for replacement revenue.
Yes, the BoA is one big ol' snake, and what it does is usually a harbinger of what's going to happen in the industry at large. And really, considering the events of the last few years, it's not hard to see why banks are turning to higher checking account fees. After all, checking accounts cost money to maintain. If serial overdrafters aren't paying for them in the form of overdraft fees, merchants aren't paying for them in the form of debit card interchange fees, and the banks can't make much money by lending your deposits out because interest rates are really low, then they have few options to cover those costs other than raising fees.
But knowing that doesn't make fees any less annoying. Luckily, you have a few ways to fight them, if you so choose. Many banks will still waive fees if you sign up for additional services with them. Also, shopping around may net you a credit union or local bank account that is fee free.
If you're sticking with BoA and you're wondering when the fee axe will drop, here's The Wall Street Journal again:
Bank of America's grouping of customers into four buckets will begin with pilot programs in Arizona, Georgia and Massachusetts later this month, according to the Wednesday memo. The nationwide launch will happen in the "second half" of 2011, according to the memo.
What do you think? Are banks justified in raising their fees? Do you think BoA's decision will affect you?