Bank of America tweaking its new menu of accounts
More than a year after Bank of America Corp. rolled out a new menu of checking accounts in Massachusetts and two other states, the bank is still tinkering with the details.
The bank designed the pilot program, also launched in Arizona and Georgia, to help test new ways to charge checking account customers as it tries to cut overhead costs, increase revenue, and entice existing customers to do more business with the bank. The bank previously said it planned to roll out the accounts to customers nationwide by the end of this year, but it now says it hasn’t settled on the exact timing or shape of the new accounts.
For instance, the Charlotte, N.C., company is still testing different monthly fees for two basic checking accounts, called eBanking and Essentials. And it is considering offering customers ways to avoid the fee for the Essentials account - which currently carries a mandatory flat monthly fee of $6 in Massachusetts.
“We have made no decisions on the construct of new product offerings,’’ said Bank of America spokeswoman Anne Pace. “When we do finalize our plans, we will communicate with our customers.’’
Bank of America, the largest bank in Massachusetts, is considering changing its checking accounts as banks search for ways to boost revenue and slash expenses to counter the impact of increasing regulation, the weak economy, low interest rates, and the collapse of the housing market.
Only 45 percent of US banks offered free checking accounts in 2011, down from 76 percent in 2009. Banks are also requiring customers to maintain bigger balances or jump through other hoops to avoid fees.
“To get free checking, you’ll have to earn it,’’ said Greg McBride, an analyst for Bankrate.com, a personal finance website.
Meanwhile, Secretary of State William Galvin said yesterday he would file legislation to bar any bank from holding state or municipal government deposits in Massachusetts unless they offer free checking to customers who are under 19 or 65 or older. State-chartered banks, primarily local community banks, are required to offer these accounts, but the statute does not apply to nationally chartered banks such as Bank of America, Citizens Bank, Sovereign Bank, and TD Bank.
If adopted, the legislation would affect many of the national banks in the state. Sovereign alone has more than $500 million in state deposits.
Banks say they already offer customers ways to avoid monthly maintenance fees, such as by maintaining a minimum balance. But Galvin said checking account fees are burdensome, particularly for the elderly and young.
In Massachusetts, the bank offers customers a choice of four types of accounts:
■ eBanking. The basic checking account costs $12 a month unless customers opt for electronic statements and avoid using tellers for any transaction they can do through an ATM or online. But the bank is testing a fee of $9 in Arizona.
■ Essentials. The bank charges a flat monthly fee of $6 for this basic checking account. There is no way to avoid the fee, but the bank is considering ways to do so. The bank is testing a higher fee of $9 in Georgia.
■ Enhanced. Carries a fee of $15 and offers more services. Customers can avoid the fee by maintaining a minimum balance of $5,000, using a credit card at least once a month, or depositing at least $2,000 in their accounts.
■ Premium. The premium account costs $25 a month. Customers can avoid the fee by maintaining a monthly balance of $20,000 or more or having a first mortgage through the bank.
Many community banks and credit unions have tried to capitalize on fee increases by larger banks by touting free basic checking accounts.
Ralph Valente, spokesman for Rockland Trust, one of the largest community banks on the South Shore, said the bank typically sees an influx of customers attracted by its free checking products whenever Bank of America announces new fees.
“If free checking is important to you,’’ said McBride of Bankrate.com, “you can still get it.’’