When you’re on a tight budget, every dollar counts. So companies that offer free checking options — rather than accounts that charge monthly fees — are a huge help.
For many, Bank of America checking accounts were a great tool to manage their money. But in January, the bank announced major changes that eliminated free checking options.
If you’re a Bank of America customer, here’s how your account might be impacted and how these changes can affect you.
Bank of America checking account changes
For years, Bank of America offered eBanking accounts. These accounts didn’t charge customers a maintenance fee as long as they followed certain guidelines, such as using paperless statements and banking online.
However, the company has slowly been phasing out eBanking accounts. This month, it also eliminated its only free checking account that did not have a minimum balance.
Bank of America moved all accounts under the free checking option to Core Checking, a version that requires customers to maintain a minimum daily balance of $1,500 or set up a monthly direct deposit of at least $250. If customers do not meet either of those criteria, the bank will charge them a $12 monthly fee.
“Our Core Checking account provides full access to all our financial centers, ATMs, mobile and online banking and offers several ways to avoid a monthly fee, including a monthly direct deposit of $250, which equates to $3,000 annually,” said Betty Riess, a Bank of America spokeswoman, in an interview with CNBC. “This is one of the lowest qualifiers in the industry and a great value.”
However, this change is a huge shift for lower-income customers. Many people don’t carry that large of a balance in their checking accounts. And, if people work in cash-based industries or are paid through systems like PayPal, they won’t meet the direct deposit criteria, either.
Kristen Clarke, president and executive director of the Lawyers’ Committee for Civil Rights Under Law, issued a statement condemning the change.
“Poor people who are denied access to traditional bank services are left vulnerable to costly check-cashing outlets, pawnshops and other predatory services,” she said.
Clarke also believes it will significantly affect certain populations.
“This action also has a disproportionate impact on poor African-American and Hispanic consumers who are overrepresented among those who are unbanked and underbanked across the country,” she said.
What the new Bank of America fees mean for you
If you have a Bank of America checking account, the bank has already transitioned your account to the new system.
When you’re living paycheck to paycheck, a $12 fee is yet another burden for you to handle. That $12 can mean not being able to put gas in your car or having to reduce your grocery budget for the week.
To avoid costly fees, you have the following options:
- Maintain a $1,500 buffer: If possible, move money from savings or another checking account to your new account to avoid maintenance fees.
- Sign up for direct deposit: If your employer offers direct deposit, talk to human resources about signing up. A monthly direct deposit of $250 or more will help you dodge the $12 maintenance fee.
- Close your account: If you cannot keep $1,500 in your account or sign up for direct deposit, you can close your account to avoid the fees.
3 free alternatives to Bank of America
If the Bank of America maintenance fee is a problem for you and you decide to close your account, it’s important to find another low-cost checking option. Free checking accounts with no maintenance fees are getting harder to find, but it’s not impossible.
Here are options that offer free checking as of January 2018:
- Local credit unions: Credit unions are one of the best resources for free checking. As nonprofit organizations, their focus is on customers, rather than profits. For example, MidFlorida Credit Union offers free checking accounts with no minimum balance. To find a credit union near you, check out MyCreditUnion.gov.
- CapitalOne 360 Checking: CapitalOne’s 360 Checking account has a $0 minimum balance and charges no monthly fees.
- Discover Cashback Checking: With Discover’s Cashback Checking, you can enjoy 1 percent cash back on up to $3,000 in debit card charges each month. There’s no monthly fee or minimum balance requirement.
Finding a bank that works for you
Your bank’s terms should help you build a secure financial future. If you’re unhappy with your Bank of America checking account, check out our list of the best banks with low fees to find a better option.
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