BofA Drops Debit Fee
Bank of America dropped its proposed debit card fee on Tuesday in response to a near tidal wave of consumer anger.
"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," said David Darnell, co-chief operating officer. "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."
The North Carolina-based bank had informed its customers last month that it would start charging a debit card usage fee of $5 a month when customers used their cards for point-of-sale transactions. The fee, which was supposed to go into effect in December, was being initiated in response to new restrictions on so-called "interchange" fees that banks charge merchants when consumers use plastic to pay for a purchase. In the past, those interchange fees were so lucrative that banks basically bribed their customers to use debit cards instead of cash.
In fact, that may be why the consumer anger was so acute when BofA announced this move, says Alex Matjanec, co-founder of MyBankTracker, a bank comparison and review site.
"Debit cards became part of our lifestyle," he says. "We all bought into this cashless society, where you use your debit card instead of cash. So people looked at this and said there's no way I can avoid this fee."
BofA was not the only big bank to drop plans for new consumer charges. JP Morgan Chase just dropped plans to test a $15 monthly checking account fee, while Wells Fargo, SunTrust, and Regions Bank all backed away from "tests" that imposed monthly fees for debit purchases too.
"The public backlash over debit card fees should serve as a big wake up call to banks that they can't take their customers for granted," said Pamela Banks, senior policy counsel for Consumers Union. "Consumers should be on the lookout for new fees and remember that if they're not happy with how they are being treated, they should shop around for a bank or credit union for a better deal."
Consumers Union developed a set of tips to help guide consumers interested in switching their accounts to a new financial institution. The tips along with a "How-To Change Banks" video is available at www.DefendYourDollars.org. In addition, several consumer groups have been promoting "Bank Transfer Day" this Saturday, Nov. 5. The idea was to have consumers close their accounts at big banks in droves, both to make a point and to start doing business with lower-cost community banks and credit unions.
"Consumers feel empowered," says Matjanec. But they need to remain vigilant, he says.
Banks have been changing other checking account rules in ways that could easily lead to paying more for banking services, he says. While less high-profile than a simple debit usage fee, many banks have boosted their "minimum balance requirements" to maintain free checking accounts, he says. For those who don't maintain an adequate balance, that could prove far more costly than the $60 annual debit usage fee. You need to read your statements carefully and make sure you either follow your bank's new rules, or find a bank that works better with yours.
For more reporting on this topic, check out 5 Ways to Profit from the Debit Card Fee-for-All and The Dangers of Using a Debit Card. We've also recently crunched numbers to show which states have the highest average bank fees in several key categories.
