Bank Of America's Poorest Customers To Be Charged For Checking

Just over a month after Republicans pushed through a sweeping corporate tax cut from which Bank of America stands to gain billions of dollars, the bank is set to start charging its poorest customers $12 a month for the privilege of having a checking account.

The charge, implemented earlier this month, applies to customers with an eBanking account, which was free for anyone who didnt receive paper statements or use bank tellers. Bank of America has phased out eBanking and transferred those customers to core checking accounts that require them to contribute a direct deposit of at least $250 a month (thats $3,000 a year) or keep a minimum daily balance of at least $1,500 to avoid the $12 monthly fee.

Most national banks with a physical presence have similar requirements for free checking accounts, according to a comparison tool on Bankrate.com. Credit unions and online-only banks, however, often dont have a monthly charge .

While $12 a month might seem manageable, thats not the case if you cant meet the new minimum qualifications for a free account in the first place, NPRs Steve Inskeep notes:

$12 per month for a checking account?
Some math:
If you have $1,000 in the account, $12 is 1.2% of itper month.
Multiply by 12 months: people without much money are charged an annual rate of 14.4% for the bank to hold their money and process checks. https://t.co/emxDj2Pw3w

Steve Inskeep (@NPRinskeep) January 23, 2018","type":"rich","meta":{"author":"Steve Inskeep","author_url":"https://twitter.com/NPRinskeep","cache_age":86400,"description":"$12 per month for a checking account?Some math: If you have $1,000 in the account, $12 is 1.2% of itper month.Multiply by 12 months: people without much money are charged an annual rate of 14.4% for the bank to hold their money and process checks. https://t.co/emxDj2Pw3w Steve Inskeep (@NPRinskeep) January 23, 2018\n\n","provider_name":"Twitter","title":"Steve Inskeep on 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$12 per month for a checking account?
Some math:
If you have $1,000 in the account, $12 is 1.2% of itper month.
Multiply by 12 months: people without much money are charged an annual rate of 14.4% for the bank to hold their money and process checks. https://t.co/emxDj2Pw3w
Steve Inskeep (@NPRinskeep) January 23, 2018

The timing of the banks decision, right on the heels of a massive Republican-backed corporate tax cut, drew outrage across the internet. A Change.org petition protesting the banks decision had more than 86,000 signatures by Wednesday afternoon.

Among U.S. banks, Bank of America is one of the largest beneficiaries of the corporate tax cut, according to an analysis the investment bank KBW shared with HuffPost.

Analysts at KBW predict Bank of Americas earnings will increase 17.8 percent in 2018 once the tax cut is factored in, compared to an expected 13 percent earnings increase for banks overall. Assuming KBWs estimates hold, that means the bank could pocket an additional $3.8 billion or so in 2018. (Bank of America turned a $21 billion profit in 2017.)

Bank of America spokeswoman Betty Riess told HuffPost the termination of eBanking isnt new or recent, despite what it seems. The bank stopped offering the account five years ago and has been slowly migrating customers into different accounts ever since, she said.

Riess couldnt say how many eBanking customers were affected by the final account closures this month. For fee-conscious customers who dont meet Bank of Americas minimums, Riess noted the bank offers a SafeBalance checking account with a $4.95 monthly fee, but it doesnt allow for overdrafts.

Poor people who are denied access to traditional bank services are left vulnerable to costly check-cashing outlets, pawnshops and other predatory services.
- Kristen Clarke, Lawyers Committee for Civil Rights Under Law

Lack of access to traditional banking services forces marginalized people into the hands of even riskier financial institutions, like predatory lenders, which exacerbates poverty, says Lawyers Committee for Civil Rights Under Law, a nonprofit organization that fights inequality.

Poor people who are denied access to traditional bank services are left vulnerable to costly check-cashing outlets, pawnshops and other predatory services, said Kristen Clarke, the groups president and executive director, in a statement. By pushing poor people into the dark world of alternative financial services characterized by higher fees and exorbitant interest rates, low-income communities are at risk of being thrust into further economic distress.

Clarke said the banks action would disproportionately affect African-American and Hispanic consumers, who have historically been excluded from banking services at higher rates.

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A 2015 study by the FDIC found that 7 percent of American households approximately 9 million households dont have a bank account.

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