Is Bank Of America Screwed?

On Friday, July 15th, Bank of America (Ticker: BAC) dipped to $9.88, and the only major bank in the single digits. If they wanted to raise their share price, all they’d have to do is conduct a reverse stock split like Citibank to trick investors into thinking it’s worth more than it is. Out of all the banks I’ve done business with, Bank of America was the worst in terms of customer service and rates and it’s interesting to see how it’s playing out.

During the financial crisis in 2008, I spread my money purposefully to Bank of America given that I was afraid any and all banks could fail, and the FDIC only insured up to $250,000. Before BoA, I had been banking with Citibank, USAA, First Republic, and a little bit at Chase. As the markets began to recover in 2010, I withdrew all my money and refinanced a mortgage away from Bank of America because I just couldn’t take how uncompetitive BoA was and how poorly I was treated.

Why Bank Of America Bummed Me Out

  1. I was stood up by the Bank of America mortgage refinance guy not once, but twice. For the second time, he even confirmed with me 45 minutes prior that he would be at his office waiting. When I got there, I waited for 30 minutes and his boss had to apologize on his behalf. Being late is a pet peeve of mine already. But, to actually flake on a customer after confirming just moments ago is inconceivable.
  2. When I successfully refinanced away from Bank of America at a rate much more competitive, Bank of America made me fill out extra forms and charge me several hundred bucks for access to my own records. I remember thinking what a bunch of crock, and unnecessary delay in paperwork because no bank had ever required this when I refinanced in the past i.e. more fees and paper work. Also wondered to myself why the hell they just didn’t give me a rate mod, or offer to match the refinance fee so that they could still make a spread off me.
  3. I lost my online password, and when I went to reset it, they said I needed to input my ATM card number, even though I destroyed it 18 months prior and didn’t have it. Instead, I had to call customer service for 30 minutes to retrieve.
  4. Their CD and savings rates were simply uncompetitive. We’re talking at least 0.5%, and often a full 1% lower than other banks at that time. You’re losing out on $1,250 to $2,500 a year on $250,000 for example. When you can simply move your money to any other bank that is offering more, you might as well, especially since the financial storm had passed.
  5. My personal banker was let go. She was actually really good and responded quite quickly over e-mail. She tried her best to push things along and get the best rates possible for me, but she was running into internal walls everywhere. When she let go of her, I decided I definitely have not one shred of allegiance to Bank of America anymore.

Too Big To Fail Doesn’t Mean It’s Not Too Big To Go Nowhere

After the massive bailout, I never thought that Bank of America would get back into financial trouble. However, with its poor service, uncompetitive rates, and more poor service, perhaps there might very well be a good old fashion bank run again. All these settlements ($8.5 billion on June 29th with mortgage bond holders), limits on what it can do (government denied the bank could pay a dividend), and massive drag on earnings (Countrywide), make Bank of America a lame duck company to own. We all know about its empire building history, but now, the world is seeing what poor management and customer service can do to a company.

If an average Joe like me fled the bank 1.5 years ago when it was supposedly on its upswing, how many folks are fleeing the bank now as its back on a downswing? There were certainly some good people at Bank of America too. But for the most part, I felt like such a second class citizen that I had to go.

Note: The value investor in me wants to buy BAC in the single digits. But, the customer in me is still pissed off about getting stood up twice. Any good or bad experiences with Bank of America on your end?

This was a guest post from Sam at Financial Samurai, where he helps readers slice through money’s mysteries. He’s also the founder of the Yakezie Network, a group of the best personal finance blogs on the web.

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Reader Comments

  1. says

    Hi Sam,

    We are a BoA customer for our checking and savings (because my wife gets them for free through her employeer), and a few credit cards with them. I can attest I don’t like them.

    • says

      Perhaps they are just simply too big for their own good. I just find it incredible they bought ML for $50 billion before the opening, when they could have bought it for $20 billion after the close that day!

  2. says

    Although I am a Bank of America customer for nearly 40 years, I recognize their shortcomings. B of A is a business bank, they recognize their business customers as the most important. Once yu understand that, you just need to act accordingly. Their loan rates are not that competitive for customers with good credit. I use my long history with them to get extra perks since I am not a big borrowing customer.

    • says

      Personally I wouldn’t put my biz accounts with them. I currently have my biz accounts (and a personal account) with Chase. Overall I’ve had a much better experience with Chase.

  3. says

    I’ve heard scary stories about Bank of America before, but fortunately have not run into anything as extreme as you’ve encountered. My one complaint is that once I went in to deposit a few hundred dollars in change that I had accumulated over a few months, and upon going to the counter, I was told that my account did not allow face to face transactions with the teller and that I would be charged $8 a month from that point on. I simply said if that was the case, then i wanted to withdrawal my money and I would go else where. They quickly complied and let the fee slide, but I have been skeptical ever since…