2011-09-30, 05:33 AM
To clarify: Bank of America is charging, once a month, $5. Total. If you use the card to make a purchase (as in, not at an ATM) that month.
What we're seeing out of BoA is basically the flip side of why some restaurants or gas stations you frequent offer cash only discounts - to avoid having to pay the credit card transaction fees (and maybe cheat on their taxes). Due to the financial reform bill, the entire small balance checking account industry just lost a whole lot of revenue, since those fees are now capped.
It's only natural that the banks either stop providing the service that suddenly makes them way less money or raise the price they charge to do so.
If you think checking accounts should be free just because they were before, it's because you didn't see the cross subsidy that was keeping them free. Is Bank of America going to be charging more than they need to to break even on checking accounts? Probably, but they've got a lot of horrifically bad mortgage investments on their books to counterbalance...
What we're seeing out of BoA is basically the flip side of why some restaurants or gas stations you frequent offer cash only discounts - to avoid having to pay the credit card transaction fees (and maybe cheat on their taxes). Due to the financial reform bill, the entire small balance checking account industry just lost a whole lot of revenue, since those fees are now capped.
It's only natural that the banks either stop providing the service that suddenly makes them way less money or raise the price they charge to do so.
If you think checking accounts should be free just because they were before, it's because you didn't see the cross subsidy that was keeping them free. Is Bank of America going to be charging more than they need to to break even on checking accounts? Probably, but they've got a lot of horrifically bad mortgage investments on their books to counterbalance...