Checking account profitability is getting more difficult to maintain. As interchange revenue generated from debit card transactions continues to fall and as more services are expected to be offered for free, such as person-to-person (P2P) transaction capabilities, online and mobile banking services and free ATM access, margins are getting squeezed. Although the reasons were not articulated, Fox Business reported that Bank of America is changing requirements for some customers to retain their free checking account status. I anticipate other banks will need do the same:
Bank of America Corp. has eliminated a free checking account popular with some lower-income customers, requiring them to keep more money at the bank to avoid a monthly fee.
This month, all remaining eBanking customers with the Charlotte, N.C., lender were switched into accounts that charge a $12 monthly fee unless the customer has a $250 or more direct deposit or a minimum daily balance of $1,500 or more. Other eBanking customers were switched over as early as 2015.
“For anyone who chooses us as their primary bank relationship, with a direct deposit of just $250 [per] month or $3,000 [per] year, they’ll get full access to all of our financial centers, ATMs, mobile and online banking,” a Bank of America spokeswoman said. “That’s a great value and our client satisfaction scores are at all-time highs.”
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
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