Is Bank of America Really Backing Off New Fees?
November 1, 2011
November 1, 2011
Succumbing to consumer pressure, Bank of America announced plans earlier today to back away from a $5 monthly debit card fee that was scheduled to go into effect next year.
“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” Bank of America co-chief operating officer David Darnell said in a statement today. “As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”
Decisions were also announced recently by Sun Trust Banks and Regions Financial to stop charging customers for using their debit cards, and last week, Wells Fargo and Chase Bank said they would each stop testing new fees as well.
It is not certain how the move by Bank of America will affect the lending giant’s hobbled reputation, but there is no sign that it is affecting the public’s gallop away from big banks. National Bank Transfer Day, an initiative started by a California art dealer who “invited” her friends to fight new fees by leaving their banks, is happening this Saturday and continues to gain momentum. The Bank Transfer Day Facebook page had 70,259 people pledged as of this morning to move their money out of big banks by Nov. 5, and the page has been shared by Facebook users more than 437,000 times.
Similarly, organizers of Occupy Wall Street and the offshoot Occupy events across the country are showing no signs of backing away. Following Chase’s no-fee announcement last week, one message was heard loud and clear from their Twitter feed: “Too little. Too late.”
On the surface, it seems that bank customers have won a complete victory in the bank fee wars. However, Northwest Credit Union Association CEO John Annaloro stressed that while this announcement marks the end of one specific fee, the fundamental difference between credit unions and banks remains.
The debit card fees were originally created as a specific way for banks to make up revenue lost when the Federal Reserve’s debit interchange cap came into effect. The cap was implemented on Oct. 1, 2011, and reduced debit card interchange for large card issuers from 44 cents to 24 cents per transaction on average.
With a business model based on fines and fees and on profiting from its customers, banks will still need to find ways to cover the new costs.
“Banks are addicted to amassing profits by charging consumers fees,” Annaloro said. “Whether debit card plans are replaced with increased checking account fees, higher balance minimums, annual card issuance charges in lieu of monthly fees, overuse fees, or over-limit fees, every consumer account is likely to be charged more. The new process may be a less transparent pricing system, but probably not less expensive for the average consumer.”
Questions or Concerns? Contact Matt Halvorson, Anthem Editor: email@example.com.