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Bank of America customers may pay more as accounts revamped

By Todd Wallack
Globe Staff / June 15, 2011

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Some Bank of America customers could soon pay higher fees for checking and other services unless they change their banking habits by maintaining higher minimum balances, avoiding tellers for routine transactions, or making other adjustments.

Over July and August, the nation’s biggest bank plans to start phasing out traditional checking products and move 530,000 customers in three states — including 170,000 in Massachusetts — to a new slate of accounts. By the end of next year, it plans to move all of its checking customers nationwide to the new offerings, including more than 2 million in Massachusetts.

The new accounts require customers to meet higher balance requirements or other conditions to get free checking, so some customers who qualified for no-fee accounts under the old system may not under the new one. For instance, the popular MyAccess checking account allows customers to avoid the $8.95 monthly fee if they maintain an average balance of $1,500 or make direct deposits every month.

By contrast, a new account, called Enhanced checking, requires customers to make deposits totaling $2,000 a month, maintain at least $5,000 in various accounts, or use a bank credit card at least once a month to avoid a $15 monthly fee. In addition, the bank also plans to offer customers an eBanking account that will allow them to avoid the $12 monthly fee if they sign up for paperless statements and make all deposits and withdrawals online or through an ATM.

Bank of America says there will be more ways to avoid fees under the new accounts than the old ones, but declined to disclose how many checking customers pay monthly service fees, and how that number might change under the new account structures. Some customers could wind up paying more, while others pay less, said bank spokesman Don Vecchiarello.

The switch to the new ac counts comes as Bank of America increases other charges, ranging from annual credit card fees to heftier penalties for overdrawing accounts.

Bank of America is hardly unusual. Financial institutions across the country have raised fees to offset sluggish demand for loans; the cost of tougher regulations; and losses from foreclosures.

“We have seen this across the board with other institutions and other types of fees,’’ said Pamela Banks, senior policy counsel for Consumers Union, a nonprofit advocacy group in Washington and publisher of Consumer Reports. “As some doors may be closing, institutions are looking for new ways to make up that income.’’

Bank of America’s fee increases are particularly notable because half of American households have an account or relationship with the Charlotte, N.C.-based financial giant, according to bank estimates. Bank of America is also the largest bank in Massachusetts.

“Changes that we’ve seen in the economy and the regulatory environment mean that all banks, including Bank of America needed to reexamine their fee structures,’’ said Vecchiarello, the bank spokesman. “The services that we provide are certainly valuable and some of these services do result in additional costs to us.’’

Here are some of the changes Bank of America is making:

■ Starting later this month, the bank will impose a $35 fee if customers overdraw their account by a penny; previously, customers were charged only if they were overdrawn by $10 or more.

■ Bank of America has warned credit card customers that they face a penalty rate of up to 30 percent on future balances if they are late on payments.

■ In February, Bank of America increased penalties for customers who make early withdrawals on new certificates of deposit.

Chris Chen, a longtime Bank of America customer and Arlington resident, said he was irked about the new monthly checking fees and the penalty interest rate for credit cards. He said he worries that there are so many requirements to avoid the monthly checking fees that he could easily wind up getting hit with a charge if he stops direct deposit or his monthly balance temporarily falls below the minimum.

“I have not been affected by the other fees yet,’’ Chen said. “However, it is clearly laid down there as a trap they would like me to walk into.’’

Todd Wallack can be reached at twallack@globe.com