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Bank of America’s New Overdraft-Free Account: Uncommon, But Not Unprecedented

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Bank of America will begin testing a new type of checking account in some states today, to complement the 2 different accounts it already offers. The “Safe Balance” account will require a flat monthly fee of $4.95, which can’t be waived. Its other primary feature will be the lack of dreaded overdraft fees.

Such accounts already exist, to some extent

Bank of America’s new type of account features a far different structure than their MyAccess and Interest Checking accounts, both of which allow customers to waive the fee each month with a minimum balance or direct deposit. The flat-rate approach is not unheard of, though, as some other big bank accounts like TD Bank’s TD Simple also opt for a low, flat monthly fee ($5.99).

The overdraft-free part is not exactly revolutionary either. For example, Washington Savings Bank of Lowell, MA issues one such account, trading no overdraft or ATM fees for a flat $4.95 monthly charge.

Who might benefit?

Many financial institutions, particularly community banks and credit unions, offer accounts for people who’ve run afoul of banks in the past. When a checking account is closed in poor standing due to unpaid overdraft or other fees, the owner is typically reported to ChexSystems, a sort of credit reporting agency for deposit accounts. Consequently, they have a tough time opening a new account with any other institution.

These “second chance” checking accounts overlook the past missteps and often feature unique benefits for those who have trouble managing their balance. However they usually incur flat monthly fees. Bank of America’s Safe Balance account seems to be positioned as a checking account of this sort, but without any mention (so far) of sidestepping ChexSystems.

At $35 per overdraft with Bank of America, you’d have to expect to bounce a check or automatic payment at least twice each year to justify the $59.40 annual cost of the Safe Balance account. So the account makes sense for someone who has not faced any major problems with paying bank fees in the past (likely not eligible to open an account with BofA), but who still dips below a $0 balance with regularity.

Even so, many other institutions offer accounts with NO monthly fees and much lower overdrafts. Credit unions and community banks, for example, might offer a free checking account with overdraft fees of just $20-$25 each. Online banks are another option. Capital One 360’s checking account has no monthly fee and only charges a small amount of interest on overdrawn balances, similar to a credit card.

Gil C /

  • Neynah

    @ mmmelissa…Thank you, my fingers are on the way to that site!!

  • StanislausBabalistic

    Credit unions credit unions credit unions!

    Seriously, how does anyone still use a commercial bank for anything but a credit card?

  • PelicanEatsCat

    BofA just hit me with $35 for going a couple bucks under, yesterday. Today they won’t undo the fee even through I have enough money to cover the overdraft. Its theft, imo. The bank has stolen $35 from me. I can’t afford a monthly fee or these kinds of overdraft fees which don’t give more than a day to solve the problem.
    It doesn’t cost them that much to cover my minimal overdraft for 24 hours.

    • R Danté Thomas

      That’s impossible. Banks can longer charge an overdraft fee for any amount less than $5.