Angry customers protested, pushed back and ultimately prevailed in the fight last fall against Bank of America Corp.'s planned $5 debit card fee. But four months later, the Charlotte lender is still considering fees for other services that could boost profits — and deliver the latest blow to the bank's public image.
Big banks have long been looking for ways to build revenue in an era of lower interest rates and regulations that limit the fees they can charge. When Bank of America began testing new account options with monthly fees ranging from $6 to $25 in three states last year, analysts said it was part of an industry-wide decline of free checking.
Those pilot programs in Arizona, Georgia and Massachusetts, which apply to new accounts and allow customers to avoid the fees by maintaining higher minimum balances, using their credit cards and taking other steps, continue.
The bank hasn't decided whether to roll out the changes nationally, and spokeswoman Anne Pace said Thursday Bank of America is not planning to increase checking account fees for existing customers.
The bank will continue to learn from its test programs before making any changes, she said.
"Our primary objective is to give our customers more reasons to do more business with us," Pace said. "Whatever we decide will be done with that core principle in mind. When we do finalize our plans, we will communicate with our customers."
Analysts say more fees are likely, though - and they expect them to fuel a new wave of public outrage.
"My first reaction is to question whether anyone at Bank of America understands banking," said Gary Townsend of Hill-Townsend Capital, a Maryland firm that invests in banks. "The idea that you segregate your customers into good customers and bad customers just is not smart. It's not good business."
Bank of America's total revenue declined 15 percent last year to about $94 billion. That was due in part to the $430 million the bank lost from new caps on the "swipe fees" banks charge merchants when consumers pay with their debit cards, an element of the Dodd-Frank financial reform law.
As that cap took effect last fall, some large lenders responded with monthly card fees. Wells Fargo & Co., the San Francisco bank that bought Charlotte's Wachovia in 2008, for instance, began testing a $3 monthly fee, while Atlanta-based SunTrust Banks Inc. began charging $5.
Bank of America's plan for a new $5 fee drew the most notice, though, prompting online petitions and widespread criticism from customers and politicians. By early November, Bank of America and other lenders had pulled back on their plans.
Fees remain a hot-button issue. A recent J.D. Power and Associates survey of customers who shopped for a new bank account or primary lender in the last year found fees are the main reason customers shop for a new bank.
Yet at many banks, potential charges remain on the table.
In Bank of America's three-state test, it is offering accounts that range from an "Essentials" option that meets basic needs to a "Premium" choice with multiple accounts and services with varying fees. Bank officials said last year, as the pilot program began, that customers would eventually be asked to switch to one of the options but that they would work with the bank to pick the best choice for them.
That change might stir up controversy if rolled out nationwide, said Claes Bell of Bankrate.com. But that's partly because Bank of America remains under a microscope relative to its peers. Bell predicts other lenders will watch closely - and follow with their own fees.
"They kind of learned their lesson from the debit card fee fiasco to maybe tread lightly," he said.
Townsend said a better way to build revenue without alienating customers is to gain market share - but Bank of America is closing branches as part of its continuing efficiency initiative and therefore isn't likely to do so.
"In the case of Bank of America, more fees are highly likely, because they seem to lack the imagination to approach things differently," he said. "... The approach is just shortsighted and it is, in my view at least, ultimately self-defeating, too."
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