Aiming to simplify and increase the flexibility of banking for retail customers, Bank of Boston Corp. is combining 15 checking accounts into four and linking deposits, investments, and loans to waive fees and offer more advantageous interest rates.

The new accounts, known as the "Eagle" plan, eliminate monthly checking fees of $9 for customers with a minimum balance of at least $5,000. Rival Fleet Financial Group Inc., requires a $10,000 minimum balance to waive a $12 fee.

New York-based Citicorp demands a $2,000 minimum balance in a checking account, or $6,000 in combined deposits and investments, to waive a $9.50 monthly fee.

Starting March 8, unless otherwise advised by the customer, Bank of Boston will automatically adjust fees and interest charged or paid depending on the combined "footings." Footings are savings deposits, money in investment accounts, and loans.

The higher the combined footings, the bigger the advantage to customers. With $15,000 in combined amounts, a customer pays no fee for banking via personal computer, and earns interest on his checking account, something not available with only a $5,000 balance.

Customers can also get reductions of up to 50 basis points on loans, or obtain an extra 10 to 20 basis points on their certificates of deposit, if the amounts they hold are high enough.

"The theme of this thing is options," said Allan Croessmann, Bank of Boston's managing director of retail marketing and investment services. "What's different now is what's included and what's needed to meet your minimums. Depending on your needs you can also customize your accounts."

Among the other innovations in the package: Bank of Boston permits members of the same family to link accounts to achieve the minimum required balance. The bank is also introducing a system whereby funds drawn on a check will automatically be transferred from a money market account, for a fee of $3, if checking account funds are inadequate. For an annual fee of $25, a customer can also obtain an overdraft line of between $1,000 and $10,000.

The new retail banking package will be made available to Bank of Boston's 500,000 customers in Massachusetts and Connecticut.

"I think it's a very strong consolidation offer by the bank," said Les Dinkin of NBW Consulting Group Inc., Westport, Conn. "The footings concept is a creative one and one that will be increasingly used by institutions to reinforce their total relationships."

Analysts described the retail package as part of a broader effort by banks to better build and price relationships with individual customers, and to expand lending.

"It's not really new that most banks are trying to drive toward a much higher value relationship with their customers," said consultant Rolland Johannsen of Furash & Co. "But they haven't been able to price those relationships very effectively and have mostly relied on packaged accounts."

Although analysts credit banks for trying to lure customers from competing institutions with these products, they also warn the plans could backfire because of their complexity.

"Banks are into micromanaging their customers," said Kevin Tynan, a Chicago-based consultant. "They think they can get more customers by changing the bells and whistles."

Mr. Johannsen agreed. "These packages are a double-edged sword because although they make a lot of sense, practically, they're difficult to implement. The danger is that everybody thinks customers want more and more and more information but the fact is that most already have enough information and what they need is simplification.

There are also questions about what will happen to the program after Bank of Boston completes an agreed-upon merger with BayBanks Inc., one of New England's most efficient retail banking institutions. The two banks are scheduled to become one by the end of the second quarter.

"We actually don't know yet," said a Bank of Boston spokeswoman, noting that for the bank, had originally decided to develop the Eagle plan two years ago and saw no reason to suspend it because of the merger.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.