Bank of America Creates Checking Account with No Overdraft Fees
Bank of America will begin testing a new checking account, known as Safe Balance, which is designed for customers who commonly overdraw their accounts. The account also appears to be set up to compete with prepaid cards, one of the fastest growing segments of the card industry.
To sign up for a Safe Balance account, applicants must pay a $4.95 fee. There is no minimum balance on the account, so customers do not have to pay extra fees if their balances fall too low. They can deposit and withdraw money like they would on a prepaid card.
Safe Balance accounts do not allow overdrafts, so users cannot spend more money than what they have deposited into the account. This helps the cardholder avoid a $35 overdraft fee for overspending on a debit or credit card.
The Safe Balance account can help the bank’s customers budget their money without a significant number of fees. One user can set up multiple accounts, as long as the customer pays the setup fee for each of them.
The new account will be tested in Rhode Island, Virginia, Michigan, Maryland, Oregon and the District of Columbia.
While Safe Balance may not be identical to prepaid cards, it does offer a unique opportunity for certain individuals who run into problems with traditional checking accounts.