Bank of America has said it will stop reopening formerly closed accounts when it receives an electronic debit or credit for the account. These so-called "zombie accounts" can generate unpredicted charges and fines for unwary consumers.
No more trouble from zombie accounts
An announcement from Bank of America said that there are some accounts that have been closed but still get electronic transactions occasionally. These accounts will no longer be revived.
The term "zombie account" was coined in a May report in Consumers Union. The post, Trapped at the bank, denounced the practice, saying it is one of the issues that make switching banks difficult for some consumers.
When a bank reopens a deceased account without telling the account holder, it can leads to unexpected fines and maintenance charges, occasionally amounting to hundreds of dollars. According to Consumers Union, the publisher of Consumer Reports, B of A and Chase are the only two large banks practicing the "resurrection" of old accounts. And now BofA is off the grid.
Customers should be diligent
Betty Riess spoke on behalf of Bank of America when she said that the issue has more to do with customers switching banks improperly than other things.
"As always, we remind customers to allow time for outstanding items to clear the account, and make changes to automatic payments and credits before closing the account."
Last year, when B of A announced it would be charging charges for debit transactions, many American consumers had had enough, prompting them to switch banks. According to a recent release from Consumer Reports, 20 percent of American customers imagined about switch banks in the last year. However, 63 percent of them say they were daunted by issues such as how you can deal with the transfer of electronic payments.
Consumer Union pleased for now
Suzanne Martindale, staff attorney for Customers Union, applauded the move by B of A, but said it is the tip of the iceberg:
"While this is a welcomed change in policy, consumers at Bank of America and other banks continue to face a myriad of obstacles that can make switching to a new financial institution a time-consuming mess. That's why we need Congress and the Consumer Financial Protection Bureau to enact reforms that make it easier for consumers to move their money."
There are a ton of different things the CFPB can do to be able to make things easier on customers when switching banks. This may include reducing check hold times, prohibiting unfair penalty fees and adopting portable account numbers to transfer between financial institutions. These are some of the policies that could be adopted to make things easier on consumers.
No more trouble from zombie accounts
An announcement from Bank of America said that there are some accounts that have been closed but still get electronic transactions occasionally. These accounts will no longer be revived.
The term "zombie account" was coined in a May report in Consumers Union. The post, Trapped at the bank, denounced the practice, saying it is one of the issues that make switching banks difficult for some consumers.
When a bank reopens a deceased account without telling the account holder, it can leads to unexpected fines and maintenance charges, occasionally amounting to hundreds of dollars. According to Consumers Union, the publisher of Consumer Reports, B of A and Chase are the only two large banks practicing the "resurrection" of old accounts. And now BofA is off the grid.
Customers should be diligent
Betty Riess spoke on behalf of Bank of America when she said that the issue has more to do with customers switching banks improperly than other things.
"As always, we remind customers to allow time for outstanding items to clear the account, and make changes to automatic payments and credits before closing the account."
Last year, when B of A announced it would be charging charges for debit transactions, many American consumers had had enough, prompting them to switch banks. According to a recent release from Consumer Reports, 20 percent of American customers imagined about switch banks in the last year. However, 63 percent of them say they were daunted by issues such as how you can deal with the transfer of electronic payments.
Consumer Union pleased for now
Suzanne Martindale, staff attorney for Customers Union, applauded the move by B of A, but said it is the tip of the iceberg:
"While this is a welcomed change in policy, consumers at Bank of America and other banks continue to face a myriad of obstacles that can make switching to a new financial institution a time-consuming mess. That's why we need Congress and the Consumer Financial Protection Bureau to enact reforms that make it easier for consumers to move their money."
There are a ton of different things the CFPB can do to be able to make things easier on customers when switching banks. This may include reducing check hold times, prohibiting unfair penalty fees and adopting portable account numbers to transfer between financial institutions. These are some of the policies that could be adopted to make things easier on consumers.
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