By Kelli B. Grant
A recent Pew Health Group study came to two conclusions unlikely to shock the average consumer. First, banks aren’t very forthcoming with information about key checking account policies and fees. And second, rising overdraft fees are expensive considering the amount overdrawn (the typical $35 charge on the average $36 overdraft works out to a 5,000% APR).
Now Bank of America is bucking the first trend – it’s the bank Pew found most transparent about listing its myriad fees – and following the second by notifying consumers about changes to its overdraft policy and increasing monthly maintenance fees on the MyAccess checking account. Analysts say it’s just the latest example of banks looking for new income sources in the light of recent credit and debit card legislation that restricts many fees. “It’s a prudent business practice for them to go forward and do this,” says Dennis Moroney, a research director for Tower Group.
Consumer advocates say the new fees are one more reason to check that you’re in the right account. “There’s a need for sustained vigilance,” says Greg McBride, the senior financial analyst for Bankrate.com. “Fee structures and requirements change at will.”
Here’s what’s changing:
Checking fees: Starting May 24, MyAccess accountholders will pay a monthly fee of $12 unless they maintain an average daily balance of $1,500 or set up a monthly direct deposit of at least $250. Previously, they paid a lower fee of $8.95 without either that $1,500 average daily balance or a direct deposit of any amount in place. A Bank of America spokesman says the MyAccess account is one of its more popular options, but was unable to estimate how many accountholders the change will affect. The higher fee is justified by benefits the bank has added in recent years, he says, such as the ability to get account information via text message.
“Free checking is not going to be as prevalent, but it’s not going away,” McBride says. If you’re among those who might now be charged a fee, hunt for a bank or credit union that offers free checking for all holders of a particular account, or whose balance or direct deposit thresholds for fee waivers are easier for you to meet.
Overdrafts: Starting June 27, all Bank of America accountholders will be subject to an overdraft fee of $35 for any transaction that overdraws their account by $0.01 or more. Previously, the fee kicked in only if the amount overdrawn was greater than $10. “That $10 threshold doesn’t really come into play any more,” a spokesman says, pointing to the bank’s policy to decline any debit card or ATM purchase that would put your account in the red. (The bank plans to test a text-message system that would allow consumers to override that decline and overdraw their accounts, for the usual overdraft fee.) Consumers can currently only overdraw via checks, he says.
Accountholders can avoid the $35-per-overdraft fee by signing up for the bank’s overdraft protection, which charges $10 for each day in which an overdraft causes funds to be funneled from a linked savings account into checking. “Everyone should be on an overdraft protection plan,” says Linda Sherry, director of national priorities at Consumer Action. “It’s cheap in comparison to five overdraft fees.”
Nickels and Dimes will keep tabs on new and rising fees and surcharges eating into your bottom line. Have one to share? Email firstname.lastname@example.org.