Bank of America adds a paper statement fee


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Bank of America Adds Monthly Statement Fee for Paper Statements

As Congress passes the Financial Reform Act, I found some recent news kind of interesting.

A story this week from American Banker (link)  said that Bank of America would start charging certain customers a monthly statement fee for receiving paper statements.  While certainly branded as an ongoing push toward encouraging paperless banking and all of the green marketing initiatives that go with this, it most certainly is a step toward adding fees to compensate for the upcoming changes with overdraft programs in August.  Bank of America has said that they will change their overdraft program to simply not allow customer transactions to take an account negative for certain types of debit card transactions (a ‘novel’ approach to this new regulation, since most banks are desperately trying to get consumers to opt-in right now). Bottom line is that a huge gravy train of fee income is about to dry up at banks and credit unions at a difficult economic time, and it is opening up some interesting moves by FI’s to make up some of it.

It will certainly be interesting to see if the fee changes mirror what has been happening in other industries during the downturn.  The airlines for example.  A recent flight charged me $50 to place my bags on the plane.  And I thought they didn’t want us to lug stuff on to the cabin of the plane.  But I digress.

So what amount of fees are we talking about?

One fee quoted in the article was for $8.95 a month – to receive paper statements!  Really?  Sure, it was for one type of account, and in only one state, but will this trend continue.  Will other financial institutions also choose to go this route.  At least they aren’t charging their own customers for accessing a BofA ATMs, or for using online banking or bill pay.  Or will they? I recently saw one bank charge customers for bill pay services (albeit a small market player, but really? Aren’t these services designed to be a hook to the customer and reduce costs to the bank?).  The path to charge fees for basic services have been seen at other banks over the years.  The majority of which, like the fees to call the call center, have been squashed down and not taken up by the rest of the industry.  But this one might be different.

I would agree with Jacob Jegher’s comment that this fee is a ‘big deal’.  Having met Jacob recently and having been on his panel about social media at  Celent’s Innovation and Technology event in NYC, I would say that Jacob knows his stuff.  His company Celent, and companies that analyze the financial services market, will be busy seeing how banks and credit unions will react to this, and more likely other types of fees to compensate for the overdraft changes.  Jegher said some banks have had better results with the carrot approach — rewarding consumers for turning off paper — than with Bank of America’s stick.  I totally agree.

The article goes on to give several examples of FI’s that have used a more reward based approach to change behavior.  I would suggest that you reward by providing better technology like personal financial management and alerts…which make the idea of statements more meaningless.  When is the last time anyone under 35 opened a paper statement?

That’s what I thought.

___________________

I plan to continue to post more frequently on the blog.  Look for changes to the format as I poke around WordPress.

And yes I work at a financial institution, but my blog posts are my own opinion.

ABOUT THE AUTHOR

Bradley Leimer is a dedicated senior marketer with experience in brand development, online / offline marketing, database marketing, web development, and online banking / mobile financial applications. Connect / Follow via linkedin.com/in/leimer and twitter.com/leimer (@leimer).

6 thoughts on “Bank of America adds a paper statement fee

  1. I would absolutely agree with your comments Bonnie (good to hear from you) and think American Banker’s take on it was spot on. I think it’s just like any other change of service for financial institutions…if one of the big players start with it, hundreds or institutions are sure to follow. I’m not really sure, like you say, that customers preferences would be to be charged $8.95 a month. Like I said, most people don’t look at their statements. With a fee like this, and what might be an industry trend…now even more people may go paperless.

  2. You have to give Bank of America credit for the spin it is able to put on charging an $8.95 fee for monthly statements by mail.

    After American Banker posted its story online Wednesday, stories began to pop up in other publications, with quotes from BofA exec David Owen. BofA said it would introduce a new e-Banking account that would be free for customers who agree to online statements only and do not use tellers for anything that can be done at an ATM. Otherwise, the customers would incur an $8.95 monthly fee.

    Owen positions the new fees as a response to customer preferences. “One segment of customers is telling us, let them bank on their terms. They’re very comfortable with the ATM, with text banking, with mobile banking,” Owen told Bank Systems & Technology.

    Except, I’m pretty sure no customers asked the bank to charge them for speaking to a teller or getting paper statements. Surely no customers expressed a preference for more fees.

    That’s one of the things that stands out to me as a lesson for other banks. BofA is not just interesting from the perspective of a new way to make up for the overdraft revenue it is about to lose, it has become very adept at managing the message to make itself look good with the general public.

    Think about it: BofA is essentially introducing new fees. But it has succeeded in pitching this as a positive for consumers.

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