According to the bank, there are two main benefits of the new "Safe Balance" account:
- Customers will pay an account maintenance fee of $4.95 per month. No other fees will be charged.
- Customers can be certain that they will never bounce a check and get hit with the $35 fee that Bank of America charges on overdrafts.
For example, since the age of widespread "free checking" has ended, lots of banks charge maintenance fees on checking accounts. Most will waive such fees if you satisfy certain conditions -- having your paycheck direct-deposited, for example. Or making a certain number of debit card transactions (from which the bank collects a fee) in a month. Or keeping a few thousand dollars in the account.
The first key difference about Safe Balance, therefore, is there's no possibility of getting that $4.95 monthly fee waived. It's there for good -- $59.40 a year.
A second downside -- depending on whether you consider the right to temporarily overdraw your account, and make up the difference later, to be a blessing or a curse -- is that you won't be allowed the right to "overdraft." Try to pay our more money from your account than you have in it, and your entire transaction will be declined.
The kicker is that this "checking" account doesn't actually allow you to write checks. As the bank explains: "You have many payment options available. Use Online Bill Pay, your debit card or cash... Other options include cashier's checks and money orders, which are available for a fee in our banking centers." But "you cannot use paper checks with this account."
So, does this new Safe Balance account make sense for anyone? Perhaps.
If you never find yourself in a situation in which you have to write a check -- if you never need to top off your kids' lunch money account at school, for example, or to pay those nice Girl Scouts for their annual cookie delivery -- then the ability to conduct all your business through debit card and online bill pay transactions might be enough.
If you overdraw your account periodically, $35 each time, Safe Balance at $4.95 a month could save you money.
Of course, the Safe Balance account benefits Bank of America. The $59.40 it gets in annual fees helps make up for other checking accounts that are not profitable for the bank.
Here's the Workaround
If overdraft fees that are your primary worry, there are easy ways around them that don't involve cutting off your access to paper checks.
A second solution -- and a good idea for many reasons -- would be to spend a bit less and save a bit more, until you've built up a buffer in your account that you're unlikely to accidentally overdraw it.
But if good record keeping and self-control aren't your forte, the nuclear option is still available. Keep your ordinary checking account, but tell your bank not to let you overdraw it. You'll probably have to fill out a form to do this, but if "opting out" of the right to overdraw your account saves you $4.95 a month, and that's worth a few minutes of form-filling. And that way, if you ever do need to write out a paper check, that option will still be open to you.
Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Bank of America and owns shares of Bank of America.