Bank of America backs off fees, again

A man withdraws cash from a Bank of America ATM in Hollywood on Oct. 24, 2012 in California. After reversing a plan last year to charge a monthly fee for debit cards, Bank of America reportedly is delaying new checking account fees.

A year ago, Bank of America tried to charge customers $5 a month just for using a debit card. Consumer backlash made B of A back off pretty fast. Now, the Wall Street Journal says the bank is shelving a plan to charge fees for new checking accounts, at least until late next year. Problem is, many of those accounts actually cost the bank money. So it's latest gambit shows the battle between profits and public relations.

Pity the big banks. American love their free checking, but many of those accounts are money losers for the banks.

“Revenue has to be higher than expenses,” says Nessa Feddis of the American Bankers Association. “It costs money to provide this 24/7, safe place to keep and access people’s money.” 

It costs between $250 and $450 a year, but the accounts often generate less than that in revenue. 

Claes Bell of Bankrate.com says banks used to profit on overdraft fees, debit card swipes, and car and home loans.

“And we’re seeing all three of those ways of making money really cut back,” Bell says.  

Some of that is because of regulations like the Dodd-Frank bill, not to mention rock-bottom interest rates.  

Still, big banks are having their most profitable year since the recession, thanks to cutting costs. But they need more revenue. So, that’s why Bank of America and others have been trying to eke some profits out of checking without creating another customer revolt. 

“They don’t want to generate those kind of headlines. It doesn’t look good,” says Bell.  

Bank of America is still testing checking fees in three states. 

Nancy Bush of SNL Financial says Bank of America can’t seem to settle on a strategy. 

“I’m one of the observers of Bank of America who’s throwing up her hands and saying enough already,” Bush says. “I think it just creates the image that they’re still sort of floundering about.”  

Bank of America declined to comment on its checking account fees. 

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