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 unexpected charges and penalties for unwary customers.
Zombie accounts stay deceased at BofA
Bank of America announced last week that it will no longer be reviving accounts that have been formerly closed and, by some error or oversight, continue to get electronic transactions.
Consumers Union did a report in May where it said that banks should not do the practice, since it makes it much harder for consumers to switch banks. This was when the term "zombie account" was termed.
According to Consumers Union, Bank of America and Chase were the only two large banks who participated in reviving old accounts like this, and Bank of America has finally decided to quit the practice. Account holders have to pay unpredicted maintenance fees and fines when a deceased account is reopened without any notice.
Only switching banks
The issue takes place when customers are not switching banks properly, according to Bank of America spokeswoman Betty Riess:
"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."
About 20 percent of American consumers decided they wanted to switch banks during the last year, but 63 percent of them said they were too concerned about switching electronic payments to do anything about it, according to Consumer Reports. This was what happened after Bank of America publicized its fees for having a debit card.
A good start, states Consumers Union
According to Consumers Union staff lawyer Suzanne Martindale, the step is good, but there is more out there:
"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."
Customers Union has pressured Congress and the CFPB to consider certain policy changes to make switching banks an easier matter for consumers. Among those are the adoption of portable account numbers that can transfer between financial institutions, reducing check hold times, and prohibiting unfair penalty charges.
Zombie accounts stay deceased at BofA
Bank of America announced last week that it will no longer be reviving accounts that have been formerly closed and, by some error or oversight, continue to get electronic transactions.
Consumers Union did a report in May where it said that banks should not do the practice, since it makes it much harder for consumers to switch banks. This was when the term "zombie account" was termed.
According to Consumers Union, Bank of America and Chase were the only two large banks who participated in reviving old accounts like this, and Bank of America has finally decided to quit the practice. Account holders have to pay unpredicted maintenance fees and fines when a deceased account is reopened without any notice.
Only switching banks
The issue takes place when customers are not switching banks properly, according to Bank of America spokeswoman Betty Riess:
"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."
About 20 percent of American consumers decided they wanted to switch banks during the last year, but 63 percent of them said they were too concerned about switching electronic payments to do anything about it, according to Consumer Reports. This was what happened after Bank of America publicized its fees for having a debit card.
A good start, states Consumers Union
According to Consumers Union staff lawyer Suzanne Martindale, the step is good, but there is more out there:
"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."
Customers Union has pressured Congress and the CFPB to consider certain policy changes to make switching banks an easier matter for consumers. Among those are the adoption of portable account numbers that can transfer between financial institutions, reducing check hold times, and prohibiting unfair penalty charges.
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