Earlier today, I visited a Bank of America office to clean out and surrender my safe deposit box. While there, I asked the representative who else received the announcement letter about the price increase for checking customers. The representative explained that letters were sent to checking customers across New England, and the bank plans to extend that later nationwide.
So, there it is. You heard it first on the I've Been Mugged blog.
During the past few days, I have had some interesting discussions about this on social networking sites. One person commented:
"I'm not understanding the controversy here. You can always change banks, right? And small accounts are probably money losers for them. They clearly have decided that they don't want certain business, so why stay with them?"
I am sure that others think the same. Here's why Sunday's blog post was important:
First, consumers can always change banks. That's not the point. Context matters. This isn't the first attempt by the bank to raise prices for checking customers (or develop new revenue streams from its point-of-view). One must look at the price increase in context of that and the bank's history.
Second, a major part of the bank's history included massive settlement payments for wrongdoing. That money has to be replaced, otherwise the bank's profits go down. So, who pays for that wrongdoing? Customers or bank executives? I think that the latter should pay, but the price increase suggests the former are paying.
Third, those massive settlement payments are usually partially tax deductible. That means, the bank can write off the payment to reduce their income taxes. That means, all of us taxpayers are subsidizing or partially paying the settlement payment for the bank's wrongdoing. Do you want to pay for another person's (or corporation's) wrongdoing? I don't, and doubt that you want to either. I find this infuriating, and hope that it infuriates you, too. The whole situation makes one wonder if the price increase for checking customers is to replace the money the bank paid for massive settlement payments. If so, the bank should have said so. Its price increase letter was silent on the topic.
Fourth, as a customer (soon to be ex-customer) of the bank, I want to know that it has done all cost cutting possible before raising prices. The notice I received failed to explain that, too. The bank's $25 monthly fee is a huge price increase; especially for low-wage or minimum wage workers. For a worker making $10 per hour, the $25 monthly fee equals two-and-a-half hours of work; probably three hours of work on an after tax basis. That is expensive banking.
Fifth, I also wrote Sunday's blog post to highlight another little-known fact by consumers: the partnership between BofA and First Data, where they share in the revenues from processing debit transactions. So, BofA makes money at both ends of the transaction... what I call double dipping. That didn't pass the smell test in 2011, nor does it pass today. I wrote about that so more consumers would know how their banks operate, since other big banks do it, too. Shady business practice, in my opinion.
Sixth: my main point is this: I want the bank I do business with to reflect my values. BofA no longer does. And, I don't trust it. I don't trust it to stop with the latest price increase. There probably will be more and higher fees. Hence, I am switching banks and wrote Sunday's blog post to explain why.
Seventh, while this may not be controversial to some people, it is important to BofA checking account customers. And, it was important in 2012 to the hundreds of thousands of people who participated in Bank Transfer Day by switching banks.
What are your opinions?