Bank of America continues to face criticism for recently announced plans to start charging its checking account customers a $5 monthly fee to shop with their debit cards.
The new fee, widely reported by news outlets in the weeks following the bank’s Sept. 29 announcement, means bank customers will be charged five dollars for every month in which they use their debit card. If a debit card is used only for ATM access, there will be no fee. Also exempt, according to Time Magazine’s Moneyland blog, are those with certain premium, high-balance checking accounts, as well as customers who have certain “big-ticket” ties to the bank, such as a home mortgage. The fee will take effect next year.
Bank customers were quick to complain about the change—scores expressing their disapproval through social media, often linking their complaints to the growing “Occupy Wall Street” movement. An online petition urging Bank of America to reverse the changes had drawn 222,850 signatures by Thursday afternoon. Fox Business Network's Gerri Willis even cut up her Bank of America debit card on live television the day the new fee was announced. Senator Dick Durbin, D-Illinois, went so far as to tell Bank of America customers to "vote with your feet" and "get the heck out of that bank."
Bank of America is the first major bank to announce a debit card use fee. Wells Fargo and Chase, both major Bank of America competitors, have each announced plans to experiment with similar $3 debit card fees in limited markets. Citibank recently announced higher fees for checking accounts instead of implementing debit card fees, according to the Los Angeles Times, but is offering exemptions to those wh0 maintain a certain minimum balance depending on the type of account.
Banks across the country have been drawn to such fees in an effort to replace revenue lost under new financial regulations, principally the Dodd-Frank Act's Durbin amendment, which restricts the fees banks can charge merchants for processing debit card transactions. Under the new rules, transaction fees are capped at 24 cents, down from the previous average of 44 cents. Bank of America alone stands to lose $2 billion in annual revenue, according to MSN Money.
Assuming that an average customer makes 25 debit card transactions a month, Bank of America stands to lose $5 per customer per month under the new regulations—exactly the amount of the new fee, which ConsumerAffairs.com says is intentional.
Bank of America CEO Brian Moynihan defended the new fees in an interview with CNBC last Wednesday, saying that the bank has "a right to make a profit". Two days earlier, President Obama stated in an interview with ABC that banks "don't have some inherent right just to—you know, get a certain amount of profit."
Duke students using the Bank of America ATM in the Bryan Center on Wednesday afternoon were all aware of the changes, but none planned to close their accounts and move to another bank as a result of the new fees.
Sophomore David Wang said he would stay with Bank of America because of the difficulty involved in switching banks.
"There aren't many other choices at Duke," he said, referencing the other two ATMs nearby—one for SunTrust and also one for Wells Fargo that displayed a blinking "Inoperable" message.
"I think if the fee was higher, it might tip me over [to another bank]," said freshman Steven Davidson. "But the banks are already profiting. They shouldn't take advantage of their customers like this."
At least one bank is capitalizing on the outcry by offering customers the opposite of new fees: a monthly payment. According to the Bradenton Herald, Manatee, FL-based Community Bank is offering new checking customers at any of its 17 branches $5 a month for the first year in a promotion good through the end of this year.
Community Bank president Katie Pembles told the Herald, "We thought paying people $5 per month rather than charging them $5 per month was a good way to set us apart."
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