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New Fees Coming For Consumers' Bank Accounts; Reward Cards Drive up Debt

Changes and new fees are coming for consumers with checking and savings accounts at banks. Last week, the Wall Street Journal reported that Bank of America is testing new account structures:

"... it will divide customers into four categories structured by account activity and number of products, according to an internal memo. The four accounts are "Premium," "Enhanced," "eBanking" and "Essentials"... The new arrangement will allow customers to "choose how they pay us," according to the memo from Joseph Price, president of consumer and small business banking."

The tests, scheduled in Arizona, Georgia, and Massachusetts, will include new fees of $6 per month for basic accounts. Accounts with more features will have $8.95 to $25.00 monthly fees. I checked the bank's press releases section, which said nothing about the test nor higher fees. If anyone participates in the bank's test, please share your opinions and experiences below.

In February of 2009, this blog warned you about upcoming credit card interest rate increases. The higher rates happened later that year. It looks 2011 will include higher costs to consumers for banking services. You would think that Bank of America would find ways to cut costs before raising prices to consumers during a severe recession. I guess that greed and arrogance makes you do strange things.

More banking news: in a paper presented at the American Economic Association's meetings, researchers at the Federal Reserve Bank of Chicago have found the reward cards lead consumers to run more more debt on their credit cards:

"We find that with an average cash-back reward of $25, spending and debt increases by $79 and $191 a month... cardholders who do not use their card prior to the cash-back program increase their spending and debt more than cardholders with debt prior to the cash-back program."

The researchers studied 12,000 bank accounts overa two-year period. Some concluded that debt went up because consumers switched their spending from cards without rewards to cards with rewards. If that describes you, remember that the rewards cards are beneficial only if you pay off the balances every month. Otherwise, the finance charges negate the reward savings or cash back.


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The kind of people who see opportunities others miss never see problems as negative. Instead they practice seeing problems as potential profits or opportunities to serve.

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