Has Bank of America Finally Made Its Customers Happy?

A new checking account targeting low-income customers may help B of A capture a new market – and make up for past sins

Mar 9, 2014 at 1:35PM


Source: Bank of America

After a year-and-a-half of research, Bank of America Corp. (NYSE:BAC) has debuted its new checking account product, "Safe Balance", which is aimed specifically at customers who have consistently low checking account balances.

The new account is being offered in five states, as well as Washington, D.C.  For a flat $4.95 monthly fee, the account doesn't support overdraft fees; if the account level drops too low, transactions simply won't be completed. The account allows users access to online and mobile banking and bill paying services, but does not include paper checks. The monthly fee is non-waivable.

The creation of a new revenue stream targeting an underserved consumer segment is great news in itself, but there's an even more important revelation here. In this product, Bank of America has shown that it has taken into account the concerns not only of regulators, but of customers – a group that the bank has been chronically mishandling since the financial crisis.

Moynihan's special project
The Wall Street Journal notes that CEO Brian Moynihan has spearheaded the effort to find new sources of revenue since he took the helm in 2010, at a time when banking reform laws were taking a big bite out of fees banks normally charged for overdrafts on checking and debit-card accounts. The four-year project has included some missteps, such as the famously retracted $5-per-month debit card account fee in 2011.


Photo: Michael Fleshman

The bank took a lot of criticism for that blunder, which gave the impression it was impervious to consumer complaints about the fee, since other banks learned from B of A's very public thrashing and dropped their own plans for a similar monthly charge. This episode made Moynihan especially sensitive to the issues of banking fees – which likely led to the 18-month research on this new product. After testing various choices in markets such as Arizona, Georgia, and Massachusetts in 2012, the bank learned what consumers wanted the most was predictability – even if that meant a consistent monthly fee.

If all goes well, Bank of America plans a national rollout of Safe Balance later this year. As free checking accounts become less common – particularly for low-income and younger consumers – products like the Safe Banking account can draw in customers that might otherwise use a prepaid debit card, or other non-bank services. Bringing these consumers into the bank creates a relationship, and a dependable revenue stream for the bank.

For Bank of America, it also represents a clear example of how it can listen to, and learn from, its customers. For the bank's damaged reputation, that could be priceless.

What your bank doesn't want you to know
Do you hate your bank? If you're like most Americans, chances are good that you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.

Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information