Bank of America Corp plans to offer an online bank account that charges an $8.95 monthly fee for paper statements and using tellers, as it looks for ways to make up for income lost because of new regulations.
As part of the new account targeted at primarily online users, Bank of America customers would be steered toward using automated teller machines and online banking for basic services like making deposits and withdrawals that would be free to use with the account.
New U.S. banking rules implemented July 1 cap overdraft fees, among others, spurring some analysts to speculate that free checking accounts may be doomed to extinction.
For two decades banks have offered free checking accounts, and charged high fees for overdrafts to help cover administrative costs.
Banks may now instead follow Bank of America’s lead and try to make checking accounts cheaper to administer, instead of doing away with free checking altogether, analysts said.
“This is a smarter way, maybe a more thoughtful way, than what I think a lot were predicting,” said Jefferson Harralson, an analyst at investment bank Keefe, Bruyette and Woods Inc.
A Bank of America spokeswoman said customers would still be able to consult with tellers on banking questions without being charged, and the company is introducing the account nationally to respond to changing consumer banking preferences.
Bank of America’s ebanking account is currently in a pilot phase in Georgia, initiated in November 2009. It will be introduced nationwide in August.
Consumer banking chief Joe Price and other Bank of America senior executives have previously said the company is examining its options to replace fee income lost due to new regulations.
Wells Fargo & Co eliminated free checking for new bank customers on July 1, introducing a $5 monthly fee on its most basic account.
That fee would be waived, if a Wells Fargo customer met certain account requirements, such as keeping a high enough minimum balance.
