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The new Bank of America SafeBalance checking account is designed to prevent customers from overdrawing their funds and racking up expensive overdraft fees.
But it comes with a price.
It sounds like this could be a great service for chronic overdrafters or customers with low balances in their checking accounts. Sixty dollars a year in bank fees is definitely better than the alternative. Overdraft fees cost customers on average about $225 a year, CNN Money says.
But The Huffington Post argues that the service already exists, and it’s free.
In 2010, the Federal Reserve “said that banks could no longer automatically charge customers huge fees for overdrawing an account balance on everyday purchases,” HuffPo explains.
The new rule said consumers have to opt in if they want so-called overdraft protection, which charges a hefty $35 or so fee every time you pay with an overdrawn account. If you don’t opt in, your debit card will simply be declined if your account doesn’t have enough money.
However, that rule doesn’t apply to paper checks or automatic bill payment plans. The Huffington Post says:
The customers signing up for this account won’t be getting paper checks, and poorer customers are less likely to have a bunch of automatic bill payments anyway. And you can avoid overdraft fees on such transactions, free of charge, simply by not having checks and not having bill payments automatically withdrawn.
Consumerist warns consumers with low checking account balances to steer clear of the new BofA account:
So if you are someone whose bank balance tends to hover close to the overdraft line and don’t want to incur fees, don’t go signing up for some ridiculous, fee-laden card from the nation’s second-largest bank.
Take your money to another bank or a credit union that has truly free checking and make sure you do not opt in to overdraft protection. Be careful of sketchy attempts to upsell or auto-enroll you into overdraft protection, and don’t let the bank talk you into the protection.
Bank of America’s SafeBalance accounts are available in a pilot program in Rhode Island, Oregon, Michigan, Virginia, Maryland and Washington, D.C.
What do you think about Bank of America’s new checking account? Share your comments below or on our Facebook page.