NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's uplifting perspective on world, national, and local politics.

Tuesday, November 1st, 2011

Banks drop plans to charge debit card fees

Bank of Amer­i­ca, acknowl­edg­ing that its lat­est attempt to shake more mon­ey out of its cus­tomers’ pock­ets was destroy­ing good­will and hurt­ing rev­enue, announced today that it was can­cel­ing its plans to impose a $5 month­ly fee for deb­it card use, fol­low­ing in the foot­steps of JPMor­gan Chase, Wells Far­go, Sun­Trust, and Regions, which have all made sim­i­lar moves in the last few days.

“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 of Bank of Amer­i­ca, in a news release. “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 attrib­uted its deci­sion to “cus­tomer feed­back” and “the chang­ing com­pet­i­tive mar­ket­place.” By the lat­ter, the bank undoubt­ed­ly means the ads that com­mu­ni­ty banks, cred­it unions, and oth­er nation­wide com­peti­tors like Ally are run­ning against it, along with grass­roots efforts intend­ed to encour­age peo­ple to move their mon­ey and take their busi­ness elsewhere.

While Bank of Amer­i­ca’s deci­sion is good news — it shows what a loud con­sumer back­lash can accom­plish — this deci­sion amounts to a cal­cu­lat­ed retreat. Bank of Amer­i­ca and its exec­u­tives are not sor­ry for hav­ing come up with this plan to force man (if not most) of their cus­tomers to pony up an extra six­ty bucks a year to use a deb­it card. They’re only sor­ry that it did­n’t work.

They prob­a­bly fig­ured they could weath­er some bad P.R. But the sto­ry did­n’t go away, and when oth­er banks start­ed can­cel­ing their plans to charge deb­it card fees, it left Bank of Amer­i­ca in a bad posi­tion. So they reversed course.

Bank of Amer­i­ca will sure­ly be look­ing to fig­ure out a new way to pass along costs to its cus­tomers. The deb­it fee gam­bit did­n’t work, so now they’ll come up with some­thing else. When they do, we’ll help sound the alarm as to what that is.

Now is still a good time to switch to a cred­it union if you con­tin­ue to do busi­ness with a Wall Street bank. Cred­it unions offer low­er fees, bet­ter rates, and supe­ri­or cus­tomer ser­vice. They’re not for prof­it and owned by their mem­bers. They’re the smart, sen­si­ble alter­na­tive to greedy banks.

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One Comment

  1. We should­n’t lose sight of how this whole thing got start­ed. All these deb­it fees banks are now rolling back were intro­duced in response to the fall in bank rev­enues from deb­it card trans­ac­tions that was the con­se­quence of the pass­ing of the Durbin Amend­ment to the Dodd-Frank bill and the sub­se­quent Fed­er­al Reserve rul­ing to lim­it deb­it inter­change at $0.22 + 0.05% of the trans­ac­tion amount.

    Those of us who were pay­ing atten­tion to what was hap­pen­ing knew that this was com­ing and warned against it. 

    What hap­pened was that the gov­ern­ment decid­ed that a sub­stan­tial por­tion of the banks’ rev­enues would be col­lect­ed by retail­ers. The banks then decid­ed to make up for the short­fall by cre­at­ing new rev­enue sources. Is that surprising?

    The bot­tom line is that the banks will find a way to make up for their lost rev­enues and their cus­tomers (i.e. us) will foot the bill.

    # by J.G. Desi :: November 1st, 2011 at 3:57 PM
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