EXCLUSIVE- Bank of America has quietly shuttered its free checking account, now requiring customers to keep a certain minimum balance in their accounts, or set up direct deposit of at least $250, to avoid a $12 monthly fee, the Wall Street Journal reported yesterday.
The banks’s eBanking customers, all of which were switched into accounts requiring the minimum balance this month, will now be required to keep a daily balance of $1,500 to avoid being charged the fee, according to the WSJ, or have a direct deposit of $250 or more. The last customers were moved to the new model today. The switch is for the bank’s online-only checking account.
The move may signal a broader shift in thinking across the industry. Ron Shevlin, director of research at Cornerstone Advisors, noted in a whitepaper last week, “It’s Time to Kill Free Checking.” Shevlin emphasizes the importance of transparency in disclosing fees, quoting a customer who said, “I don’t begrudge banks charging for their services; I do begrudge their lack of transparency.’
But the move, transparent or not, was not well received by some customers. A petition on the website Change.org was created on January 5 this year to protest the removal of the free checking accounts at BofA. The petition, which requires 50,000 signatures, currently has over 46,000 signatures according to the website. These are familiar waters for the nation’s second-largest bank. In 2011, the bank enacted a $5 monthly maintenance fee for debit card uses, only to withdraw it amid a storm of consumer outcry and negative press.
While banks have been wrestling with how to pay for the cost of administering checking accounts for a while, some fintech challengers have taken a different approach: responding to the entrenched dislike consumers have for banking fees, many challenger banks have pledged no fee policies when it comes to their accounts: Simple, a challenger bank owned by BBVA but operated independently, does not offer checking account fees, for instance, while other banks, such as Chime, don’t offer overdraft, checking, or late fees.
Bank of America tried this approach, when it first began offering free eBanking checking accounts to its customers in 2010. It stopped offering them to customers three years ago, though existing customers were allowed to keep their accounts up until this point.
Additionally, the bank has also protested the characterization of these accounts as absolutely free, manager of consumer banking products and channels Betty Riess told the Charlotte Business Journal.
Over the years we’ve been simplifying and streamlining our products. Our core checking account provides full access to all our financial centers, ATMs, mobile and online banking and offers several ways to avoid a monthly fee, including a monthly direct deposit of $250, which equates to $3,000 annually.