I’m Staying With Bank of America…"Are You Crazy?"

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Recently, I mentioned to my girlfriend that I was going to stay put with using Bank of America for my checking account, despite their recent BRILLIANT, customer satisfaction-driven (yeah right!) decision to start charging $5 per month for the use of a Bank of America debit card.

To my brilliant statement mentioned in the title of this post, she then asked if I had a screw loose. Truthfully, her comment has merit because man, oh man, have Bank of America and Netflix made some moves recently that have upset their customers beyond belief, or what?!

As such, the goal of today’s post is to explore the various factors that went in to my decision to stay with Bank of America (for now at least). And, by doing so, I hope that it will help you to make your decision as well, if you are one of their customers.

Drivers for the $5 Fee

As much as I hate to say this, I understand why Bank of America is going to start charging this fee. It all comes down to the finances, as you might imagine.

To get a grasp for their motivations, we must first dig in to the inner-workings of how debit card transactions are processed after you “swipe” the debit card at the store. For example, let’s say that you’re at a grocery store buying a $3 bottle of wine for a dinner party on Friday night (since you’re a My Personal Finance Journey reader, and that’s how we roll with $3 bottles of wine). You approach the cash register and take out your Bank of America Visa debit card to swipe. After swiping, the card machine then asks you whether you’d like to process it as “debit” or “credit.”

Choosing between these two options has huge financial ramifications for the store from which you’re purchasing the wine.

  • If you choose “credit,” the store will be charged 2-3% of the purchase cost in credit card fees to be paid to Bank of America (payday for them!) and Visa (for providing the infrastructure). 
  • If you choose “debit,” the store will only be charged a few cents.

If you are Bank of America, let’s think about it – which one would you prefer? Would you (as Bank of America) prefer paying the infrastructure fees to Visa, or would you like the merchant to send those to you along with some extra for a profit?! Obviously, this is a no brainer!


Details of the $5 Fee

So, as we saw in the previous section, even though I may not like Bank of America’s decision to start charging fees, I do understand it.

Furthermore, it is important to understand (my girlfriend was slightly confused about this) that the $5 per month debit card fee will not be charged for simply having a debit card. Rather, you must actually use it to buy something at a store in order to be charged this fee. ATM usage remains free (thank goodness!).

Why I’m Sticking with Bank of America

Now that we’ve gotten the important background information out of the way, we can now explore my reasoning for why I’m committed currently to staying with Bank of America (despite these debit card fees), and YOU can determine for yourself if you think I’m crazy/out of line!

These considerations are listed below:

  • I only use my debit card for ATM purposes.
    • The only time I ever use my debit card is to deposit cash or checks or make withdrawals at the ATM. Therefore, I won’t be charged the $5 monthly fee.
    • For my finances, using a debit card makes zero sense because I get 1-3% cash back when I make purchases on my Chase Freedom Visa credit card. I am very attentive to paying off my credit card once a week so that I don’t accumulate a month-to-month balance.
  • I haven’t found any banks yet that can match what Bank of America offers for my needs. 
    • One of the only reasons that I’m still using Bank of America is that they are truly everywhere in the United States. They are in Arkansas where my parents live, they are on the East Coast where my sister and I live – they are everywhere. 
    • And, the fact that Bank of America is everywhere has made it very easy on me over the past few years since I have moved three times.
    • Often, I have considered moving my checking account to an online bank since they offer much better interest rates and other features. 
      • However, there is something to be said about having a physical bank if I need a certified cashier’s check (I just checked, and online banks such as ING Direct’s does not offer certified checks) to buy a house or pay a moving company. Additionally, I question the security of mailing a check through the Postal Service in order to make a deposit…

Conclusions

Overall, the bottom line is that I will continue using Bank of America for my checking account as long at they aren’t charging me a fee. When/if they do, I’m out of there very quickly!

One thing that is important to note is that if you are a person that uses a debit card frequently for debt avoidance reasons (because you are afraid of racking up large amounts of credit card debt if you use a credit card), now might be a good time to explore changing banks from Bank of America. In my opinion, there simply is no reason for ANYONE in today’s competitive banking environment to be paying a fee for a regular checking account/debit card (unless of course you receive benefits that total more than the fee).

It would probably be beneficial if in a future post, I explore the hypothetical case of what bank I would select if I were to choose another besides Bank of America. In fact, as I think about this question right now, I’m really not sure what bank I would go for! That would indeed make for an interesting discussion! Be on the lookout for that post in the not-too-distant future.

How about you all? Do you think I’m crazy for staying with Bank of America? If you are a Bank of America customer, are you currently looking to leave due to the debit card fee change? Why or why not? 


Can you provide any suggestions on a good bank that would be suitable for me if I were to change from Bank of America? Should I go with a local or national chain? Regular bank or credit union?


Share your experiences by commenting below!

    ***Photo courtesy of http://www.flickr.com/photos/moneyblognewz/5264722308/sizes/m/in/photostream/

    Comments

    1. I am staying with Bank of America, but I do not use my debit card. I have a premium account which means I won't have to pay a fee anyway. Lastly, I use an airline card almost exclusively to earn frequent flier miles.
      My recent post How to Ace that Interview?

    2. Totally agree – I also plan on sticking with Bank of America. Another benefit of banking at a bank with lots of branches is for notarization services. Most banks won't notarize something for you unless you are an account holder without charging a fee.
      My recent post Valpara

      • That's true. I've never had to use a bank's notarization services. I've used people that are certified where I've worked.
        My recent post Contents and Building Insurance – Are These Coverage Types Necessary and What Do They Include?

        • Also – Madidies is my sister – You know you wrote a semi-good post when it sparks your own sister to comment! haha
          My recent post Easy Like Sunday Morning Weekly Roundup – # 2 – October 16th, 2011

    3. I hate BoA, but my husband and I do not plan to close our checking account for similar reasons to what you listed. We use our credit cards for all eligible purchases and our Ally debit card for the remainder. The only transactions we do with BoA now are occasional check deposits through their ATM – although now that Ally permits scanned check deposits we probably won't even do that. On the rare occasion we need cash from an ATM we use Ally because they reimburse all ATM fees so we don't even have to hunt for a certain type. Like Madidies said, the only good service BoA has provided us that our internet banks couldn't was free access to a notary that we needed one time (though since then I have found other free ways to accomplish that).

      I have to correct you on one point, though. I too opened a BoA account because I thought that it was a national chain and I knew I would be moving several times over the next decade. However, I didn't know at the time that the CA BoA system is totally separate from the rest of the BoAs in the US. They share a name and you can use the ATMs and all but they function as separate entities otherwise. My husband, when he moved out of CA, smartly closed his CA account and opened one in our current state. I tried to stick with my CA account and it gave me endless customer service headaches because my local branch basically couldn't do anything for me and their national phone customer service is terrible. I eventually closed my CA account and we made my husband's a joint account.

      When we move back to CA I'm going to encourage my husband to close his current account and not open another one with BoA, especially because by then we will have lost our “student” status and free checking. By that time I hope we can join a credit union since we won't be moving around so much, although we will still probably do 98% of our banking through internet banks.

      • Very high quality advice ERHR! Thanks so much for sharing.

        So, I'm curious – in your opinion, do you feel that a person can rely solely on an online bank for all of their banking needs? Or, will they most likely always need to have a brick and mortar bank that they can use as well?

        Also, I didn't know that the CA BOA's were separate! You learn something new every day.
        My recent post Contents and Building Insurance – Are These Coverage Types Necessary and What Do They Include?

        • I guess I would say in my experience I can live with only an internet bank. They have been adding functionality over time, too. As I said above we still have our BoA account but have used it only on the rarest of occasions (notary) and that was because it was a free service.

          However, all my banking is simple (bill pay, direct deposit, occasional checks in or out, rarely ATM use) I don't know the total range of banking services that other people use that may not be offered by internet banks. I guess we're not cutting the cord with our brick-and-mortar bank yet because we don't know what needs might come up that our internet banks can't handle. But so far so good.

          • Thanks for sharing. I think I could survive with an online-only bank if needed, but don't know if I'm quite ready to make the leap yet.
            My recent post Easy Like Sunday Morning Weekly Recap and Roundup – # 5 – December 17th, 2011

    4. I don't' use BOA for personal account but I need them for business. So I guess I'm sticking with BOA also.
      My recent post Mortgage rates are so low! So why aren’t people applying for mortgages?

      • @ YFS – I'm curious – why are you tied to BOA for your business? Do you have clients with them as well that dictate that?
        My recent post Easy Like Sunday Morning Weekly Roundup – # 2 – October 16th, 2011

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