Bank of America customers will soon get an array of new account choices — and potential fees — as the Charlotte bank tries to adjust to financial overhaul measures and improve its service reputation.
The nation's biggest consumer bank this month will begin testing new account options in Georgia, Massachusetts and Arizona before a national rollout planned for later in the year.
The move is part of what is expected to be the industrywide decline of free checking as banks look to make up fees lost to new laws and regulations. Now Bank of America customers could shell out $72 to $300 a year to use accounts and debit cards, unless they take steps to avoid the fees, such as maintaining minimum balances or using credit cards.
"The prospect of higher fees always goes over like a lead balloon," said Greg McBride, senior financial analyst for research firm Bankrate.com. But he noted Bank of America is providing consumers with "plenty of avenues to avoid fees."
For the past year under chief executive Brian Moynihan, the bank has been working to develop a new approach to consumer banking as customers grumble about punitive charges and new laws take effect. The bank has acknowledged it needs to improve customer satisfaction scores, which have lagged rivals in recent years.
Joe Price, the bank's head of consumer and small business banking, said the new options will help the bank recover lost revenue, but he wouldn't say how much. The main purpose, he said, is to better meet customer needs, provide more clarity about prices and offer more choices.
"We are trying to move from a product-driven company to a relationship, customer-focused company," Price said.
The bank, however, may find resistance to new charges, according to a recent study by the Bank Administration Institute, which provides research to the industry. Eighty-five percent of consumers surveyed said they do not expect to pay fees for a checking account, up 1 percent from February 2010.
Despite this resistance, many banks are looking at rolling out fee-based programs because they're expecting to lose revenue as new rules limit what they can charge merchants who take debit cards and customers who overdraft their accounts, said Ajay Nagarkatte, managing director of BAI Research.
"It's the large banks that lead on this," he said. "You'll see a ripple effect throughout the industry."
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