Bank of America drops debit card fee as competition pounces
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:
- GTE Federal Credit Union, based in Tampa, Fla., will pay anyone who opens a checking account between now and Bank Transfer Day $5 per month for a year. The credit union has about two dozen locations in the Tampa Bay area.
- In nearby Lakewood Ranch, Fla., Community Bank & Co. will pay new customers who open a Value Checking account with direct deposit $5 a month for a year. “We needed to do something to help consumers who are under attack from behemoth national banks charging fees that just don’t make sense,” President Katie Pemble said in a statement. The bank has 17 locations in west central Florida.
- The Peoples Savings Bank of Urbana, Ohio, will pay customers $5 per month to use their debit cards in November, December and January. In a statement, President Brice Kadel said community banks are against debit card fees, so "to demonstrate opposition to these fees and the important advantages of community banks over large megabanks, we chose to do something fundamentally different." The bank has two branches in Ohio.
- In San Diego, Mission Federal Credit Union will pay customers 25 cents every time they use their debit card through the end of the year, and they can earn up to $5 per month.
- Randolph-Brooks Federal Credit Union in San Antonio was already paying members 10 cents each time they used their check card. But through year’s end, members will receive 15 cents back on each check card purchase.
So much for the big banks’ arguments that they can’t make ends meet unless they assess more fees.