Bank of America Just Did It Wrong…Again.
Bank of America just made headlines. One could say it was even a bit of repeated history. Their sole free checking account has been replaced. In its place is a fee-based account. Unless you maintain a minimum balance of $1500 or have at least one $250 direct deposit a month, there will be a $12 fee. That’s not to say the move was unexpected. They’ve been hinting at it for years. It’s part of a trend away from “anything-goes” free checking accounts, and is in line with other banks.
Whatever their full rationale, BoA’s CFO stated that the actions were driven by a desire to “balance” benefits for all…whatever that means. However, analysts suspect it may be the bank’s way of insulating itself from regulatory scrutiny of their overdraft practices. We covered this “dirty little secret” before (http://cuzoom.org/white-papers/checking/), where those least able to afford are most burdened by the costs. In other words, the poorest members subsidize Free Checking for everyone else. It’s still a common model, despite being against the mission of both credit unions and community banks.
So regulatory concerns may explain Bank of America’s decision, but they did it all wrong…again. Remember back in 2011, they announced a $5 fee on all debit cards? It didn’t go over well, to say the least. Negative outcry was substantial, and the bank got rid of the fee. They violated a basic business principle: If you are going to raise the cost, make sure you raise the Value!
We believe credit unions and community banks are poised to deliver that value, and it might (or might not…really!) include a free checking offering.
Over 500 institutions offer that value through Secure Checking. Join us on a short webinar to learn how you can embrace your mission while growing your institution.
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