Under pressure, U.S. bank drops $5 monthly debit fee
Bank of America says decision was a response to feedback, competition
Bank of America Corp. reversed course Tuesday and scrapped plans to charge a $5 per-month debit fee, handing a victory to consumers and protesters angry with big banks.
The second-biggest U.S. bank was under pressure to make the change as rivals backtracked from plans to charge customers for using their debit cards. Bank of America said that the move was in response to customer feedback and competition.
“It’s a sign of consumer power in action,” said Norma Garcia, manager of the financial services program for Consumers Union.
Last week Jpmorgan Chase & Co. and Wells Fargo & Co. decided to cancel test programs, while Suntrust Banks Inc. and Regions Financial Corp. said Monday that they would end monthly charges and reimburse customers.
Banks began charging the fees to make up revenue lost to a law that slashes the fees they charge retailers when consumers swipe their cards.
The customer fees sparked a firestorm of criticism from consumers and politicians, and many smaller banks and credit unions shunned the practice.
U.S. Sen. Richard Durbin, the author of the provision that limited debit card swipe fees for retailers, told reporters on Capitol Hill that the reversal by major banks proves consumers will walk away from banks who they feel aren’t treating them fairly. “I hope the banking industry learns from this,” the Illinois Democrat said.
Anti-wall-street protesters, who set up camp in a New York City park more than six weeks ago to demonstrate against economic inequality, also claimed the move as a victory, but one they shared with other initiatives.
“This is what the movement would consider a very, very small first step on rectifying an oppressive dynamic between the financial services industry and the 99 per cent,” said Ed Needham, a spokesman for Occupy Wall Street.
With banks ending the fee, there could be less consumer interest in Saturday’s Bank Transfer Day campaign, which encourages people to close their accounts at big banks and move their money to credit unions this Saturday. Kristen Christian started the campaign on Facebook on Oct. 4.
Bank of America, which planned to start charging the fee next year, began softening its stance last week. The Charlotte, North Carolina, bank planned to give customers more ways to avoid the charge, such as maintaining minimum balances, having paycheques directdeposited or using their Bank of America credit cards.
“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” the bank’s co-chief operating officer David Darnell said in a statement.