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 didn’t 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 (that’s $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 don’t have a monthly charge.
While $12 a month might seem manageable, that’s not the case if you can’t meet the new minimum qualifications for a free account in the first place, NPR’s Steve Inskeep notes:
The timing of the bank’s decision, right on the heels of a massive Republican-backed corporate tax cut, drew outrage across the internet. A Change.org petition protesting the bank’s 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 America’s 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 KBW’s 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 isn’t “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 couldn’t say how many eBanking customers were affected by the final account closures this month. For fee-conscious customers who don’t meet Bank of America’s minimums, Riess noted the bank offers a “SafeBalance” checking account with a $4.95 monthly fee, but it doesn’t 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.”
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 group’s 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 bank’s action would disproportionately affect African-American and Hispanic consumers, who have historically been excluded from banking services at higher rates.
A 2015 study by the FDIC found that 7 percent of American households ― approximately 9 million households ― don’t have a bank account.