A little while back we reported about Bank of America’s move to start a $5 a month debit card fee for those who used their card for purchases. In that article, two things we talked about were 1) Making some noise and let BofA know you aren’t happy about the new debit card charge, and 2) Switch your account to another bank, like a credit union or an online bank with free checking.
Well guess what?
Bank of America is dropping their $5 fee on debit card usage!
Because of customer uproar, Bank of America (NYCE:BAC) has reversed course and will not be charging customers a monthly fee to use their debit cards for purchases.
Here’s a quote from Bank of America’s co-chief operating officer David Darnell:
“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee. Our customers’ voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”
Bank of America Stuck Out Like a Sore Thumb
In recent days, JP Morgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) both said they were dropping their test programs to charge a debit card fee. SunTrust and Regions Bank recently announced they were dropping their debit card fees.
Bank of America was stuck out there as the lone big bank charging this fee.
On top of that, online banks, like PerkStreet, made it known to consumers that they aren’t charging debit card fees (in fact they give you rewards for using your debit card) in order to attract customers who were fed up with Bank of America.
One has to wonder about the timing of the announcement. November 5th has been dubbed “Bank Transfer Day,” a movement that encourages people to switch their accounts from commercial banks to not-for-profit credit unions. The goal is to get people to complete the transfer of their account by November 5th.
Bank fees, such as Bank of America’s $5 fee, were among the reasons Bank Transfer Day was created.
The folks at Occupy Wall Street must be happy to hear that BofA, and others, have decided against debit card fees. While it’s difficult to say if OWS had a real effect on the banks reversals, it is encouraging to know that people can make a difference if they make their voices heard.
Why Charge a Debit Card Fee at All?
Why charge a debit card fee now anyway? Good question! Back in July, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is supposed to overhaul Wall Street and protect the consumer.
Stuck into that law is the Durbin Amendement, which limits the amount of money that banks can collect from merchants for debit card transactions (when you use your debit card to buy stuff). This cut out a chunk of profit that the banks could collect. As a result, many banks, such as Bank of America, worked to find other places to make up that lost money. They found that spot by charging customers a debit card usage fee.
But fortunately, the fee isn’t sticking.
What Next from the Banks?
You have to wonder what is next from the banks? The Durbin Amendement limited debit card fees that banks could charge. For the top banks that means a lot of money. Where else will they look to make up that lost revenue? Will they stick in other fees to hit the consumer?
The protection that the Dodd-Frank legislation is supposed to give also leaves open a big incentive on the part of the banks to find other ways to improve their bottom line. As we saw with debit card fees, the banks will try to make that money back where they can.
Make sure you watch the mail from your bank like a hawk and keep an eye out for any changes that may result in more fees for you!
In the end, it’s up to you, the customer, to allow or dis-allow various bank fees. You vote with your dollars and your voice. When people voice their opinion by putting their money elsewhere it sends a huge message. This is true of all companies, not just banks.
Don’t think that because you are the “little guy” that you can’t make a difference.
Bank of America Corporation | Newsroom | Bank of America Will Not Implement Debit Usage Fee http://mediaroom.bankofamerica.com/phoenix.zhtml?c=234503&p=irol-newsArticle&ID=1624356&highlight=
Bank of America drops $5 debit card fee – Nov. 1, 2011 http://money.cnn.com/2011/11/01/pf/bank_of_america_debit_fee/index.htm
Bank Of America Backs Down On Debit Card Fees – Forbes http://www.forbes.com/sites/halahtouryalai/2011/11/01/bank-of-america-backs-down-on-debit-card-fees/
Under pressure, Bank of America drops $5 debit card fee | Reuters http://www.reuters.com/article/2011/11/01/us-bankofamerica-debit-idUSTRE7A04E120111101