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Bank of America ends free checking option, causing customer uproar

Bank of America has eliminated its only free checking account that doesn’t require a minimum balance, causing an uproar from customers on social media and spurring a petition to reverse the decision.

The Charlotte, N.C.-based bank said it moved eBanking customers into accounts that require them to keep a minimum daily balance of $1,500 or set up a monthly direct deposit of $250 or more in order to avoid a maintenance fee of $12 a month.

The move leaves few options for low-income consumers of big banks who either aren’t able to keep that much money in their checking accounts, don’t use direct deposit or get paid through some other method, like PayPal.

“The debate over Bank of America’s accounts and fees points to a larger economic justice issue — people with less income pay more to get cash, make payments, and conduct their business,” said Dory Rand, president of the Woodstock Institute, a financial advocacy organization. “Without access to safe and affordable bank accounts, low-income consumers often turn to costly alternative financial services, such as currency exchanges or check-cashers. The bottom line is: the most financially vulnerable need more and better options to transact their business and participate in the financial mainstream.”

Bank of America’s eBanking account didn’t charge a monthly maintenance fee as long as consumers didn’t require paper statements or visit bank tellers. It had an $8.95 monthly fee if customers used those options. The account was introduced in 2010, but the bank stopped offering it to new customers several years ago, Bank of America spokeswoman Betty Riess said. Reiss said the shift was part of the bank’s broadening of digital banking services across all accounts.

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Brittany Williams, a doctoral student in Georgia, was one of those vowing on social media to close her Bank of America account after news of the account elimination. Williams said she’s been a Bank of America customer for more than a decade; it was the first checking account she opened when she was 18. But because the University of Georgia does not allow her to split direct deposit between her main checking at another bank and the Bank of America account, “it made no sense to continue using their services,” she said.

Riess said that only a small number of customers still had eBanking accounts when the move was made, although she declined to be more specific. She also noted that the monthly direct deposit threshold is among the lowest in the industry.

Fee-free checking accounts without a minimum balance are increasingly rare among big traditional banks. JPMorgan Chase, the biggest bank by deposits in Chicago, doesn’t offer a no-fee checking account without a minimum balance. Its Total Checking account charges $12 per month that is waived with at least $500 in direct deposits each month, a $1,500 minimum daily balance, or $5,000 in select deposits and investments linked with the account, spokeswoman Christine Holevas said. BMO Harris, Chicago’s third-largest bank by deposits after Chase and Bank of America, still offers an account without monthly fees, as long as customers opt for digital statements. Paper statements run $2 a month and there’s a minimum opening deposit of $25.

The lowest-fee option now at Bank of America is a Safe Checking account. That charges a monthly fee of $4.95, but does not include checks or allow overdrafts.

Because basic checking accounts are costly for banks to maintain, their availability among traditional banks should continue to dwindle, said Kimberly Palmer, a banking expert and writer at NerdWallet. She recommends consumers explore online banks like Ally that tend to have fewer maintenance fees and may have higher interest rates than their bricks-and-mortar competitors.

However, although the digital divide has narrowed in recent years because of the prevalence of smartphones, roughly 3 in 10 of the poorest Americans — those with household incomes below $30,000 a year — don’t own one, according to Pew Research. Almost half of those individuals don’t have internet or a traditional computer at home. That prevents many of them from accessing online banking as an alternative.

A Change.org petition asking Bank of America to reinstate the eChecking account garnered more than 50,000 signatures on Tuesday.

sbomkamp@chicagotribune.com

Twitter @SamWillTravel

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