Thursday, June 07, 2007

Bank of America: Don't Make Us Hurt You!

Bank of America is launching a customer education program to inform account holders about its fees, and how to avoid them:

Bank of America Corp., which collected more than $22.4 billion from customers last year for everything from using a competitor's ATM to paying a credit card bill late, is launching a new effort Wednesday ostensibly to help customers avoid the pesky fees.

It's an ironic campaign for the nation's second-largest bank since more than half its annual revenue comes from non-interest income that includes such fees. In the recently completed first quarter, growth in fees and other non-interest revenue sources helped the Charlotte-based company post a 5 percent earnings increase.

It's not clear if the bank thinks its online and in-branch advertising campaign -- called "A little knowledge is a powerful thing" -- will actually cut back on that source of income, and the company declined to disclose how much it's spending on the effort.

Obviously, it's a good thing for customers to understand pricing, though if it requires a special campaign to explain it, one might ask whether the pricing is too complicated to begin with. And yes, it is legitimate for banks to charge fees for some things.

But let's face it - fees at large national banks like BoA are high and have been increasing like crazy, thanks in some part of consolidation in American banking and the resulting lack of competitive options. And so it's hard not to watch Bank of America undertaking this effort and think of a bully warning his victims, "Here's what you need to do not to get punched in the face."

It's also a bit galling to see the fees go up as the level of service has generally declined. Yes, there are now great self-service options like online banking that make life easier. But when one actually needs to interact with the bank, well, it's not the old days anymore.

(My favorite recent one: getting foreign currency. Time was, you went to a branch that carried foreign currency and got some, for a fee. Now, at Bank of America, you have to order it online. You can have it delivered to your local branch - but you have to pay a delivery fee for said currency to be moved from one Bank of America location to another. Maybe next up will be a delivery fee for the cash to be inserted into the ATMs...)

There's too much money in fees for Bank of America to do the right thing, which is simplify and reduce them.

I assume that this move is meant to create goodwill and warm fuzzies among Bank of America customers. I don't think it will work.


Jeff said...

Perhaps BoA will continue to increase fees to offset (1) the marketing expenses of this program and (2) the reduction of total customers paying certain fees. These fee-conscious customers will applaud BoA's supposed transparency, while everyone else will silently pay the difference. If they raise a stink, BoA can use this program as a shield. From the unrealistic caves of corporate marketing, everyone wins!

mary Schmidt said...

Following on Jeff's comment - I can just imagine the BofA's marketing meetings - navel gazing at its finest. Yep, it sounds real good, doesn't it? But, um, gee, you folks ever get out of those hallowed halls and talk to your customers>

I changed for BofA long ago and am very happy with Compass Bank. You can still - if you do a little research, find some good banks.

P.S. No fees from Compass for small biz accounts and a free personal account along with the biz account. And, nope, they're not paying me to say this (Their web site is terrible by the way.)