Published;Jan 23, 2018 12:55 a.m. ET
Bank of America has shut down one of its checking accounts, used by some low-income consumers
Bank of America has eliminated one of its checking accounts.
Bad news for low-income consumers: There’s now one fewer place where you can store your cash for free.
Bank of America BAC, +0.69%has gotten rid of a free checking account called eBanking, The Wall Street Journal reported. More than 45,000 people have signed an online petition protesting its elimination, on Change.org.
Instead, the account holders will be charged a $12 monthly fee if they don’t have at least a $250 direct deposit that month, or a daily account balance of $1,500 or more. The eBanking accounts debuted in 2010 and offered an affordable alternative to consumers without a lot of cash.
Bank of America, the second-largest U.S. bank by assets behind J.P. Morgan Chase JPM, +1.17% has not allowed customers to open that account since 2013, a bank spokeswoman said. And it was free only if consumers used online services exclusively. Since 2014, it’s offered “SafeBalance,” which costs a flat fee of $4.95 per month and does not allow overdrafts.
Many low-income Americans were already having trouble finding places to keep their money. Approximately 10 million U.S. families don’t use a bank at all. One reason: Monthly maintenance fees triggered by low bank balances, a fear of overdraft fees and a general distrust in banks.
When consumers don’t use a bank, they often end up paying more for individual services that banks provide for free, such as check cashing, said Thaddeus King, an officer of the consumer finance division at Pew Charitable Trusts, a Philadelphia-based nonprofit.
Free checking accounts are rare in areas where low-income consumers need them the most, according to a 2017 analysis by Moebs Services, a firm that researches financial services companies.
Consumers should shop around for low-cost banking options that work for them, said Kimberly Palmer, a credit card and banking expert at the personal finance company NerdWallet.
AmazonAMZN, +2.53% and Wal-MartWMT, +0.82% have also created their own financial services programs to cater to customers who don’t use banks. U.S. Bank USB, +1.42% offers a low-cost checking account. Like Bank of America, it requires a $1,500 minimum balance or monthly direct deposits of $1,000 or more. It also charges $2.50 for out-of-network ATM fees.
Consumers should make sure the institution they choose is insured by the Federal Deposit Insurance Corporation (FDIC), Palmer said. They should also be sure they know in advance how to access their money, whether that’s through an ATM fee reimbursement program, or with a debit card, she said.