© Chris Keane / Reuters / REUTERS
A Bank of America customer uses an ATM machine.
By msnbc.com staff
Bank of America, the nation's second-largest bank in terms of assets, is planning to make changes to its basic checking accounts that would introduce a monthly fee for customers unless they agree to bank online, buy more products or maintain certain balances, according to a report in The Wall Street Journal.
Pilot programs in Arizona, Georgia and Massachusetts are experimenting with charging $6 to $9 a month for what’s called an “Essentials” account. Other account options being tested in those states carry monthly charges of $9, $12, $15 and $25, but give customers opportunities to avoid the payments by maintaining minimum balances, using a credit card or taking a mortgage with Bank of America, according to an internal memo cited by the Journal.
The fee plan is the latest sign of the challenges the banking industry faces as it grapples with low interest rates, slow economic growth and new rules limiting many types of service charges, the Journal said.
At Bank of America, for example, 2011 revenue declined by $26.2 billion, or 22 percent, from its 2009 level. Other big retail banks are rolling out similar plans to raise their fee revenue, including J.P. Morgan Chase and Wells Fargo, the Journal said.
“We are wary generally of banks charging fees, which have grown to be a highly lucrative source of revenue for them, and also punitive for consumers,” said Bart Naylor, an expert in financial regulation at the consumer advocacy group Public Citizen.
“Bank of America and other banks are probing to see what the market will bear, and we think it’s good for consumers to respond to that the way they know best -- either by changing to another bank, or by considering a credit union, which tends to be more genial,” Naylor added.
Big banks are walking a fine line by raising fees, the Journal said, as they risk alienating their best customers and drawing fire from politicians. A wave of criticism from customers led Bank of America to cancel plans to institute a $5 debit card charge last fall.
Checking accounts are often costly for banks because they lose money on them. They’re used to lure younger customers in the hope that they will stay on at a bank and eventually become more affluent and use other services, such as mortgage and business loans and credit cards, the paper said.
Bank of America did not return calls for comment.
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