After its competitors dropped their planned fees, and faced with public backlash, BOA cuts plans for a new debit fee.
Bank of America Corp. (BOA), which announced plans for a $5 monthly debit card fee in late September, has abandoned the idea following nationwide backlash from consumers and lawmakers, Bloomberg reported.
The bank fee would have started in January. David Darnell, co-chief operating officer for BOA, listed customer feedback and competitive pressure for the bank’s change of heart.
In the days before BOA reversed course, JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) decided against similar charges, which left BOA standing alone as the only U.S. lender among the biggest five with plans to introduce the fee. Citigroup Inc. (C) and U.S. Bancorp had already rejected the idea, while SunTrust Banks Inc. (STI) and Regions Financial Corp. eliminated their check-card fees on Oct. 31.
“For a lot of consumers, this was the last straw,” said Jean Ann Fox, director of financial services for the Washington- based Consumer Federation of America told Bloomberg. “Banks have been making a lot of changes to accounts, adding fees and raising the minimum balance needed, and consumers were clear that they objected to one more fee.”
Bill Hardekopf, CEO of research firm LowCards.com, warned banks will continue to seek ways to make up the estimated $8 billion annually they’re no longer bringing in after the Durbin Amendment went into effect, capping debit fees. “Banks may increase existing fees or raise the introductory interest rates on credit cards.”
After the new debit fees were announced, people held demonstrations in Los Angeles and Boston protesting the fees, and a Washington woman gathered more than 300,000 petitions against the fee. President Barack Obama criticized the fees as “not necessarily fair to consumers” and Representative Brad Miller (D-NC) introduced a bill in October that would make it easier for customers to switch banks, Bloomberg reported.
“Consumers across America have a much larger voice in this process today than they did even a few weeks ago,” said U.S. Senator Richard Durbin, an Illinois Democrat who pushed for the fee caps. For more on the backlash against the original fees, see the article Durbin Hits, Fight Escalates on p. 56 of CSD’s November issue.