Hating Bank of America

Yesterday I walked into a branch of Bank of America with my daughter's banking statement. In the summer of 2006, as we were preparing to see her go off to college, we opened a college account at the Bank. The reasons were convenience: I have an account at Bank of America, where my paycheck is direct deposited, so I could move money into her account easily without incurring wire fees. The ATM machine at her college is operated by Bank of America, so she would save the $1.50 withdrawal fee. And we were assured, that for five years, this combination of checking account with a debit card and savings account, would be free. We opened the account.

The first statement arrived and there were monthly fees on the checking account. I went to the branch, they apologized, and removed the charges. I should have known.

Bank of America has a feature: any extra cents from a charge or check gets deposited into savings. It sounds good, encouraging savings, but it makes it impossible to reconcile the monthly statement. For a young woman in charge of her own finances for the first time, this results in inattentiveness, which allows fees to reappear and overdraft inevitable. And once that account is overdrawn, the fee is $35 for each overdraft. We could only negotiate away the first set of overdraft fees, after that they stick.

That's how Bank of America makes money.

This week I noticed that there was a $3 monthly fee on her savings account. Since when are savings accounts fee-driven instead of interest bearing?

I went to the branch to inquire. According to the polite manager, the savings account had gone below $300, so they charge a fee. Yes, the Bank had informed us that there would be no fees charged, so she will remove the fees for the last three months. But the issue is for low income people, why would they want to keep their money in a bank, when they are penalized for being poor? Where is Jimmy Stewart!

This is criminal. The savings sweep mechanism prevents novice banking customers from tracking accurately the money that goes in and out of their accounts. Every overdraft is $35. One mistake our daughter made, some iTunes charges, just pennies over what she had in her account, cost $145.00!

We were told that there were no fees for five years. Yet the default billing function seems to be reinstating fees so that the customer must remain vigilant.

If banks stopped charging these excessive fees, maybe they would be encouraged to start investing money again, and not just gambling it away on derivatives with credit default swaps covering their asses.