Bank of America considers new checking account fees
March 01, 2012
Bank of America made waves last fall with its plan to charge debit card users a $5 monthly fee. After widespread public opposition, the bank dropped the proposal. However, reports have surfaced today that the nation's second-largest bank is now developing a revised fee structure that could result in new monthly charges for many of its checking account customers.
New fees for checking accounts
According to a report today from The Wall Street Journal, Bank of America could be considering new checking account fees of up to $25 per month.
Pilot programs are reportedly underway in Arizona, Georgia and Massachusetts. There, some individuals with "Essentials" checking accounts are being charged fees of $6-$9 per month. Other checking options in the program reportedly include monthly charges of $9, $12, $15 or $25 per month. However, users may be able to avoid these fees by maintaining minimum balances, using a credit card or taking out a mortgage with Bank of America.
Searching for lost revenue
Bank of America is not the only bank looking for new sources of income. Wells Fargo and JPMorgan Chase are just two of the other major institutions said to be looking for ways to increase revenue in the wake of changing federal requirements.
The Dodd-Frank Act effectively cut in half the merchant fees banks receive from businesses for debit card purchases. In addition, new regulations regarding overdraft fees have taken another bite out of bank profits. In 2011, Bank of America's revenue dropped 22 percent, or $26.2 billion, from its 2009 level.
Last year Bank of America was one of several institutions -- including Chase, SunTrust and Regions Bank -- to float the idea of boosting revenue by charging a monthly fee for debit-card use. After media reports about the proposal appeared last fall, public response was overwhelmingly negative and each bank decided to drop the charge.
Checking accounts in the cross-hairs
Bank of America is not the only financial institution rolling out new checking account fees. Chase and Wells Fargo have both instituted new maintenance fees on certain accounts within the past two years. As more large banks tack on extra fees, it remains to be seen how customers will ultimately respond.
With Internet banking more accessible, online checking accounts could become a convenient option for those seeking lower costs. Others may turn to local credit unions, many of which charge less in fees than larger banks. While Bank of America may hope that its customers will resist these options, it may be in trouble if its recent history with fees repeats itself.