Bank of America is preparing to unveil a new checking account the Charlotte bank hopes will appeal to low-income customers and compete with the burgeoning world of prepaid debit cards.
The offering, known as “Safe Balance,” is the product of four years of testing and a reaction to increasing scrutiny from lawmakers and the public over fees and the increasing incursion of non-banks into the financial sector.
Safe Balance will carry a $4.95 monthly fee that cannot be waived. Customers will not be able to write paper checks but will have full access to online and mobile banking and automatic bill pay. The bank said the terms are a response to customers’ desire for predictable fees and protection from small mistakes.
Bank of America’s traditional checking account offerings, the interest-free MyAccess and its interest-bearing checking account, will remain unchanged. The existing offerings have monthly fees that can be waived if customers maintain minimum balances or use direct deposit.
The bank said the new account will not appeal to everyone. Customers who are able to meet balance requirements will likely be better off in Bank of America’s existing checking accounts.
Bank of America has been testing different checking account features since 2010, soon after CEO Brian Moynihan took the helm. That year, the bank eliminated overdraft fees on most debit card transactions as they came under fire from lawmakers and consumer advocates. This new account will go a step further and not charge overdraft fees at all.
The tests have not always gone over well. In 2011, Bank of America floated the idea of charging a $5 monthly fee for customers who used their debit cards. The idea was a reaction to new regulations in the Dodd-Frank financial reform law that crimped fee income on debit card swipes, but Bank of America was forced to quickly retract the idea in the face of intense public backlash.
Bank of America also tested a long slate of options in 2012 in Massachusetts, Arizona and Georgia. The bank said it learned from those tests that customers wanted fewer options and more predictability.
The new checking account offering comes as prepaid debit options have become increasingly popular for low-income customers. Non-bank companies such as Wal-Mart are becoming known for their prepaid offerings and other financial services, such as check cashing.
The accounts will be rolled out Thursday in Rhode Island, Michigan, Oregon, Virginia, Massachusetts and Washington D.C. The company intends to offer them nationwide soon.