Mehrsa Baradaran, the associate dean for strategic initiatives and the J. Alton Hosch Associate Professor of Law at UGA’s School of Law, was recently quoted in Slate about Bank of America ending a free checking service.
The free checking service used by some of its lower-income depositers was called e-banking. The customers were transferred to new accounts that will require them to keep a minimum balance of $1,500 or agree to have $250 from their paycheck directly deposited into their account every month. Otherwise, they will have to pay a $12 monthly fee.
Lower-middle class households who have trouble maintaining a minimum balance in a checking account are, by and large, not very profitable customers unless they’re paying out the nose in overdraft fees.
“They’ve never been free. That’s the truth of it,” said Baradaran, who is the author of How the Other Half Banks and The Color of Money: Black Banks and the Racial Wealth Gap. “They’ve always been laced with overdraft fees and you’ve had to have minimums. Free has been a misnomer for a while.”