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.