Bank of America has won praise lately for doing a better job than most big banks of informing customers about its checking account fees. But now those fees are about to go up.
Starting May 24, the bank will charge a monthly fee of $12 for its MyAccess checking account, up from the current $8.95. To avoid paying the fee, customers will have to keep at least $1,500 in the account or set up a direct deposit of at least $250; previously there was no direct deposit minimum.
Bank of America also will begin charging a fee of $35 every time a customer overdraws her account by even a penny. Currently, the bank doesn’t begin charging overdraft fees until an account is overdrawn by $10 or more.
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Previously the bank won kudos from the Pew Center for Charitable Trusts, which investigated bank fees and found that Bank of America does the best job of informing customers about its fee structure. When consumers click the “Facts about fees” link on the BofA’s MyAccess website, up pops a slick mini website that explains things like overdrafts and how to calculate the interest rate on a credit card.
But the bank’s move to charge overdraft fees more often probably won’t win it any friends at Pew. The center’s report found that the median amount by which people overdraw their checking accounts is $36, and the average overdraft fee is $35, with an average repayment period of seven days. Stretched out over a full year, that equals an annual percentage rate of 5,000%, “a costly way to address credit needs,” Pew found. “Bank overdraft penalty fees are disproportionate to the size of the median overdraft amount.”
That will be even more true now that BofA’s fee will kick in after the first penny of overdraft.
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Image: Michael Gray, via Flickr