Bank of America is offering you the chance to pay a fee for a service you may not know you already have.
The bank on Thursday launched a new kind of account, known as the "SafeBalance" account, which costs $4.95 a month and comes with no paper checks. Its major selling point is that it won't let you overdraw your account.
That sounds great in theory, especially if you're broke and can't afford to pay a $35 fee every time you're overdrawn. But if this is a luxury, it's one that anybody can afford -- and you don't need to pay $4.95 a month for it.
As the Consumerist blog points out, no one has to pay overdraft fees if they don't want to.
In a blow to the financial industry, the Federal Reserve in 2010 said that banks could no longer automatically charge customers huge fees for overdrawing an account balance on everyday purchases. Under the new rule, customers must opt in for what is called "overdraft protection," the service that charges you $35 every time you try to pay for a $2 cup of coffee with an overdrawn account. If you don't opt in, your card will simply be declined if you don't have enough money in your account to make a purchase.
So who does Bank of America think will actually pay for this account?
"The SafeBalance account was designed for a small segment of customers who want added protection against all overdrafts," Betty Riess, a spokesperson from Bank of America, told The Huffington Post in an email. "The key difference between SafeBalance Banking and our more traditional checking accounts is that there are no checks and no overdrafts."
According to the Federal Reserve's website, the 2010 rules targeting overdraft fees don't apply to transactions made by check or automatic bill-payment plans. In other words, if you've set up your bank account so that your phone bill is withdrawn from your account every month, then you could still incur an overdraft fee even under the new rules.
Bank of America's SafeBalance card does protect you from that, and from bounced checks. But 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fees on such transactions, free of charge, simply by not having checks and not having bill payments automatically withdrawn.
Unfortunately, it turns out a lot of people don't totally understand what overdraft protection is in the first place. According to a 2011 survey by the Center for Responsible Lending, nearly two-thirds of people who opted for overdraft protection under the new rules did so in order to avoid paying overdraft fees, when in fact charging overdraft fees is precisely what "overdraft protection" does.
This confusion is probably why some of the poorest Americans continue to shell out billions of dollars every year in overdraft fees, despite the Fed's attempt to prevent banks from overcharging their most vulnerable clients.
This is not the first time Bank of America has tried to launch an unusual fee plan. It tried charging debit-card customers $5 a month back in 2011, which pretty much blew up in the bank's face. Just months after announcing the change, Bank of America abandoned the plan amid widespread critical backlash.