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Sunday, June 12, 2011

Bank of America Fee Ripoff

I signed up for a Bank of America checking account because they gave me $100 for doing so.  To avoid a monthly "maintenance fee" I had to keep $700 in the account.  It was convenient to keep the account, since they had all those ATMs, and deposits were easy.  But at one point in November 2010 I was going over some old statements, and I noticed that there was some fine print (maybe on the October statement) warning me that they were increasing the minimum balance to $1500.  I think the maintenance fee also increased -- it was now $14.  Anyway, I was just under $1500 so I transferred some money, but of course, this was probably too late to avoid the fee, since the fee kicks in any time you dip below (and, as above, I only realized that there was a fee after it was too late).

Anyway, I was hit with the $14 fee, was annoyed, and finally in May decided to do something about it.  I called customer service and told them I had noticed the fee, and asked what it was for.  They explained that it was a maintenance fee that had kicked in in November.  But then they checked and it looked to them like my balance was over $1500 the whole time, so they said they'd refund the fee. As above, I thought that my account had probably dipped below $1500, but I wasn't going to argue, and in any event I treated this as a "courtesy" by them.

I assumed they would have refunded the fee even if my account had dipped below $1500, given how recently they had imposed the fee, and how I had not actually received notice of it (i.e. I hadn't read the fine print on my statement).

But then a few days later I got a fat business size envelope from BOA saying that in fact, my balance had dipped below $1500, so they didn't owe me a refund, and I wasn't going to get one, even as a courtesy.  Nyeah nyeah ni nyeah nyeah, the letter said (not really).  The fatness was because they enclosed a BOA fee schedule. 

That was the beginning of the end of my relationship with BOA.  I called them to try to close the account by phone.  They were willing to do so, but it would take them 10 business days to put a check in the mail with my money.  I needed to get out of this relationship faster than that, so I went into the bank the next time it was open, and closed the account.  The guy would have given me a refund of the $14 if I'd stayed (although perhaps he would have wanted me to put my direct deposit to BOA), but I wouldn't have stayed for $140.

Astonishing that they think they can do this to customers.  The economics really make no sense for a bank to treat its customers this shoddily.   Admittedly, I was not a particularly "valued" customer, since I didn't do direct deposit, but I typically had over $1000 in the account, and after they raised the limit, I typically had over $2000 in it.  Given that the bank reserve rate is 10% the fact that I had $2000 in my account gave them the ability to lend $20,000.  Even if they were only lending at 5%, that means they would be making $1000 per year pure profit off of someone like me.

I assume they figured that by upping the maintenance fee requirements, they would (1) get more fees, (2) get higher balances out of their customers, (3) drive customers who didn't send direct deposits to BOA to start doing so.  It's quite likely that they've gotten more out of (1)-(3) than they've lost as a result of people like me closing their accounts, so in that sense it was in their interest to up the maintenance fee.

But we can change that.  Send a message to BOA by closing your account.  Find a credit union or an on-line bank.  There is plenty of free checking around; why should Bank of America be making thousands of dollars a year off of you, AND charging you fees?  If you have direct deposit with BOA, so much the better; other banks (e.g. USAA right now) will be willing to pay you $100 for shifting your direct deposit to them.


1 comment:

  1. (talking to myself, I know). Wow, your call for people to close their BOA accounts and move to credit unions was prescient. Rather than heed the warning of this post, BOA decided to impose a $5 per month fee on holders of debit cards, which has prompted calls for account holders to close their accounts and move to credit unions, just as you (I) suggested above.

    Yes, BOA has now retracted that particular fee proposal. But right now, there are several people -- all making hundreds of thousands of dollars a year -- thinking hard about ways to impose less-obvious "fees" on you that you won't notice and that will help the bank stay rich.