Bank of America drops debit card fee as competition pounces

Fist clutching money

And then there were none.

Bank of America, the last holdout in the big bank debit card fiasco, has abandoned plans to charge customers $5 a month to use their debit cards.

In a statement Tuesday, the Charlotte, N.C.-based bank, said it was backing down "in response to customer feedback and the changing competitive marketplace."

All the other major national and regional banks that had implemented or were testing debit card fees caved into pressure from both consumers and the competition in recent days, relenting on the fees.

JPMorgan Chase & Co. opened the floodgates late last week, when it announced an end to its test of $3 monthly debit card fees, which it rolled out in Georgia and northern Wisconsin earlier this year.

The nation's largest bank was shortly followed by Wells Fargo & Co., Atlanta-based SunTrust Banks, and on Tuesday, Birmingham, Ala.-based Regions Bank, which had already started charging a $4 monthly debit card fee.

It will refund money already deducted from its customers' accounts.

Not only are consumers rallying against big banks and their outrageous fees, calling for people to move their money to credit unions and community banks on Saturday, which has been dubbed national Bank Transfer Day, even local financial institutions are getting into the act, offering to actually pay consumers for using their debit cards.

Scattered credit unions and community banks around the country are offering to pay customers either a flat monthly fee or a certain amount for each transaction if they use their debit cards.

Some banks that offer accounts nationally also have taken advantage of the big banks' bumbling, including EverBank.

That strategy shows there’s still money to be made on consumer accounts and flies in the face of the arguments of the big banks, which claimed the extra fees were necessary following the Oct. 1 introduction of the so-called "swipe fee" cap, limiting the fee banks can charge merchants for debit card transactions to 24 cents per purchase, well below the average 44 cents they had charged.

Local financial institutions are using the backlash as their own marketing tool. For example:

So much for the big banks’ arguments that they can’t make ends meet unless they assess more fees.

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