Jan. 6. 2011, 2011 -- Bank of America is testing changes in its account programs, along with a new fee structure. The company will try out four new products under the pilot program beginning later this month, for new customers in Arizona, Georgia, and Massachusetts, states which represent 10 percent of Bank of America's customers.
The new account structure includes a basic checking account called "Bank of America Essentials" with a monthly fee of $9.
Currently, basic checking customers can avoid a monthly $8.95 service charge by maintaining a balance of around $1,500 or by having at least one direct deposit made each statement period.
A Bank of America spokesperson said today, customers will not be able to avoid a monthly service fee in the new "Essentials" account, even if they maintain a minimum balance amount or by using direct deposits.
"Many of our customers choose to have a monthly fee. They like that predictability," said Susan Faulkner, Bank of America Deposits and Card Product Executive, during a press conference today.
The other new accounts unveiled today, called, "Enhanced" and "Premium," would apply to customers with higher balances and multiple interest-bearing checking and savings accounts, or link to its credit card or mortgage services. And a new "Platinum Privileges" account requires the use of Bank of America's investment services.
Customers choosing those accounts will have to maintain higher minimum balances than previously. Bank of America has not yet disclosed what fees will be assessed, if balances fall below the minimum.
New customers in the states in the pilot program will only have the four test products, or the bank's "eBanking" program available to them, bank officials said at a press conference today. Customers with an "eBanking" account can choose a monthly fee or sign up for paperless statements and make all deposits and withdrawals online or at an ATM.
Consumer Groups Wary
The primary reason for the change in the account structure is the "economic realities" of customers and their needs, said Faulkner.
But consumer groups suspect the changes are connected to action being considered by the Federal Reserve which late last month proposed capping debit card interchange fees that banks charge merchants for each transaction. The proposed limit is 7 to 12 cents for each transaction, down from an average of 44 cents in 2009. Some banks have said that capping debit card interchange fees will damage revenue and force them to increase fees elsewhere.
The Fed is accepting comments about the interchange issue until February 22 and will vote to approve the final proposal by April 21.
Faulkner, speaking for Bank of America, said the pilot program was not prompted by the interchange fee debate. But Ed Mierzwinski, Consumer Program Director of the Public Interest Research Group, or PIRG, said he is skeptical.
"The goal of these regulations is to make fees consumers can plan on," said Mierzwinski.
"It is a modus operandi of banks to blame the latest federal rule on their attempt to get more money from consumers," said Mierzwinski. "The banks were claiming they were offering free checking but offering unfair overdraft fees. … Regulators, Congress and consumer groups are trying to force the banks to treat consumers more fairly and get rid of unfair practices on consumers."
He cautioned that the interchange fee debate is only starting to affect consumers. He fears additional charges to consumers.
"The interchange issue is like Armageddon," said Mierzwinski. "Banks are just screaming about this one."
According to Bank of America, 1 out every 2 households in the U.S. banks with Bank of America. That is about 57 million households."