Bank of America has eliminated its free checking account program, a service that was popular with many low-income customers looking to avoid extra fees for having a low balance.
Beginning this month, all eBanking customers will face a $12 monthly fee unless the customer has a direct deposit of $250 or more or a minimum balance of $1,500. The process of switching over Bank of America customers to this service began as early as 2015. The bank does have a checking account geared towards low-income customers that charges only a $4.95 monthly fee, but it doesn’t allow customers to write paper checks, a financial necessity in the lives of some individuals.
Nearly 46,000 individuals have signed a Change.org petition pleading with the bank to keep the free checking account option.
“Many low income families do not meet these requirements. There have been times where I’ve only had $10 to my name. That wouldn’t even cover the maintenance fee,” the petition states. “Bank of America was one of the only brick-and-mortar bank that offered free checking accounts to their customers.”
A monthly fee of $12 could cause some customers to overdraft on their accounts, resulting in even more fees. Overdraft fees collectively cost consumers over $15 billion annually, and around 18 percent of account holders pay three or more overdraft fees a year, with half of that group paying 10 or more fees a year. These fees have caused some financially unstable individuals to skip banking altogether, largely affecting black, lower-income customers.
Overall, some 9.6 million, or seven percent of all Americans, manage their finances without a bank account, according to the Federal Deposit Insurance Corporation (FDIC). Of those, 18.7 percent are families earning under $30,000, compared to only 1.1 percent of families earning over $50,000. Eighteen percent of black individuals are without a bank, compared to only 3 percent of whites.
Bank of America, the second-largest U.S. bank by assets, claims this move is the latest change in its quest to “[streamline] the company by exiting business lines and shedding ‘non-core’ products.” The bank’s CEO, Brian Moynihan, is pushing the bank to do business primarily with customers who have high credit scores. According to the Charlotte Observer, Moynihan told investors and analysts last week during the bank’s fourth-quarter earnings conference call that their focus remains on “prime” and “super prime” borrowers with average credit scores of at least 760.
Meanwhile, Bank of America, along with the rest of the country’s top banks, will get a significant tax windfall from the recently passed Republican tax bill — a $3.5 billion tax windfall, to be exact, according to a Goldman Sachs report obtained by ThinkProgress.
The bank, along with Wells Fargo, Boeing, and other corporations and banks, was praised by the White House for using their tax savings to help their employees in the form of bonuses. The one-time, $1,000 bonuses for their 145,000 employees, however, is a drop in a bucket when compared to the $3.5 billion the bank is expected to reap from the tax bill.