A lot of things are happening in the world of finance right now. Banks have to make some very tough and unpopular decisions. Bank of America is getting rid of free checking accounts. This decision doesn’t go over too well with lower-income customers. They are now required to keep more money in the bank to avoid monthly fees. What makes things even worse is how this funds cannot be withdrawn in case of emergency either.
It is evident Bank of America has made a tough call regarding their free checking account. The business model is pretty straightforward. Consumers can get such an account to access financial services. They need to keep a lower amount of money in their account at all times. With this option no longer available, they will need to keep more money in their account. All customers will be upgraded to this new plan automatically. There’s now a $10 monthly “accessing” fee unless there is a direct deposit of $250. Another option is to keep a minimum daily balance of $1,500 in said account.
An Unpopular Decision by Bank of America
Both of these options are not viable for lower-income customers. Bank of America wants to charge customers for basic checking services. This approach is not unique to BoA either. Various banks around the world have attempted a similar approach in the past. We will see more of these measures in the coming years. Free checking accounts are costly for banks, even though they generate revenue. This mainly comes in the form of overdraft and other fees.
Customers of Bank of America are not too happy about this development. Some users are effectively switching banks because of this reason. It’s evident this move will cost the institution a lot of customers in the long run. At the same time, if other banks implement similar measures, there are few options left available. Emerging players who embrace the free checking account model will see an influx of new customers. the eBanking account was introduced by BoA back in 2010. Eight years later, it will be removed as an official option for good.
It is important to note there’s still an option for lower-income customers. The checking account has a monthly fee of $4.95. Users do not get the option to write paper checks or overdraw their accounts in this case. For freelancers and small entrepreneurs, this decision is a major blow. It is possible we will see a lot of people flock to credit unions moving forward. This move may also push more people into the world of Bitcoin and cryptocurrency. In that ecosystem, there are no fees, penalties, or anything along those lines.
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