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Bank of America is Latest Big Bank to Back Down on Debit Card Fees

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Bank of America

After all the customer complaints, protests and news reports, the big banks have decided to give up on the debit card fees. Today Bank of America "cried uncle" on its home page:

We heard you. No debit card fees.

It seems like the banks were hoping that customers would accept the new debit card fees. The banks probably thought they had a good excuse based on the new debit card regulation that took effect in October. In today's environment when there's so much anger at the banks, that excuse just isn't acceptable.

Bank of America give up on debit card fees

Over the last week, several other banks have also decided to end their debit card fee plans. Here are some of them:

  • First Tennessee Bank announced today on its Facebook page that it will not be implementing the debit card transaction fee that took effect on October 22. No customers will receive this charge. First Tennessee was going to charge customers up to 14 cents per debit card transaction for up to $3 per month.
  • Regions Bank on October 31st issued a press release that "announced that it has eliminated the monthly CheckCard fee for all accounts, effective Nov. 1, and will refund CheckCard fees already incurred."
  • SunTrust Bank on October 31st issued a press release that "announced that it has eliminated the monthly Check Card fee on its Everyday Checking account. The fee will no longer be charged beginning Wednesday, November 2, 2011, but all clients who incur - or have previously incurred - the fee prior to that date will receive a full refund."
  • Wells Fargo on October 28th issued a press release that said "it is cancelling its planned five-state pilot of a monthly $3 fee for users of its debit cards as a response to customer feedback the bank has received."
  • JPMorgan Chase Bank didn't make an official announcement, but on October 28th, the WSJ reported that Chase "has decided that it won't charge customers who use their debit cards to make purchases, according to a person familiar with the bank's plans."

That WSJ article also stated that US Bank, Citibank, PNC Bank and Key Bank have "said in recent days that they won't impose monthly fees on debit cards."

Even though debit card fees have been eradicated, it doesn't mean the banks won't find other ways to make up for the loss revenue caused by the debit card regulation. Monthly service charges are now higher and harder to avoid. Citibank's new fee structure was one example of this. Also, you'll have to be watchful for higher fees for services like wire transfers and ATMs and paper statements.

So even with the banks backing down on this new debit card fee, it's still a good idea to participate in the Bank Transfer Day movement. Just remember that not all credit unions offer free checking accounts. I described one example in this July blog post. Make sure the credit union that you choose offers a truly free checking account. I described this and other features to look for in my post Finding the Best Free Checking Accounts at the Best Credit Unions.


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Comments
13 Comments.
Comment #1 by Anonymous posted on
Anonymous
We shouldn't lose sight of how this whole thing started.  All these debit fees banks are now rolling back were introduced in response to the fall in bank revenues from debit card transactions that was the consequence of the passing of the Durbin Amendment to the Dodd-Frank bill and the subsequent Federal Reserve ruling to limit debit interchange at $0.22 0.05% of the transaction amount.

 

Those of us who were paying attention to what was happening knew that this was coming and warned against it.  Here is one of the things we wrote at the time: http://blog.unibulmerchantservices.com/banks-may-limit-debit-card-transaction-size-to-fight-fee-limit

 

What happened was that the government decided that a substantial portion of the banks' revenues would be collected by retailers.  The banks then decided to make up for the shortfall by creating new revenue sources.  Is that surprising?

 

The bottom line is that the banks will find a way to make up for their lost revenues and their customers (i.e. us) will foot the bill.

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Comment #2 by pdxmale posted on
pdxmale
And remember the "promise" that the merchants would lower thier prices due to the lower debit card fees.

ANOTHER DODD-FRANK LIE

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Comment #3 by Anonymous posted on
Anonymous
PDX. I wish I could disagree with you but, according to the CEO of Home Depot, all the the reduction in the interchange fee has done is to give that retailer a $35 MM windfall. Although BOA and others have backed off their debit card fee proposals, bank customers seeming lose anyway because of the loss of checking rewards and other incentives programs. If there's a trickle down effect there, I haven't found it either. However, my main gripe with BOA is that they made a lousy decision in acquiring Countrywide and, as a result, have taken a big hit because of losses associated with Countrywide's shoddy mortgage portfolio. I still maintain that BOA's decision to attempt a debit card fee had everything to do with covering those losses. We'll see what they come up with next. Personally, I'd still recommend that BOA customers bail out asap because they will otherwise inevitably end up paying a premium for BOA's bad decision making.

 

of the loss

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Comment #4 by pdxmale posted on
pdxmale
If the Countrywide deal was the BIG reason --- then why did all the others create the debit card fees? I am sure that created some pressure. But, I still think that DODD-FRANK was the driver of the decision.

GOVERNMENT can't seem to get it - let the market level itsself - don't try to level it tru regulation. They always seem to miss the UNINTENDED consequences.

The market is what forced them  to drop the fees ---the way it should work.

So, now as a result of DODD-FRANK we have the loss of rewards and other incentive programs, no reduction in merchant prices, the loss of tens of thousands of jobs...... and much, much more.

LETS HAVE GOVERNMENT CREAT SOME MORE REGULATIONS.

3
Comment #6 by Anonymous posted on
Anonymous
We would not have had Dodd-Frank at all if banks had been responsible about lending and we hadn't had a housing collapse, economic meltdown, bailouts, recession, and outrage that is not going away any time soon.

And of course the banks will find another way to extract their fee. Notice will show up buried in that 3-point print somewhere. So hope everyone who chooses to stay with a big bank remains vigilant.

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Comment #8 by lou posted on
lou
BofA Bonds,

That's a pretty good rate as long as you hold to maturity and BoA doesn't default. Of course, that couldn't happen, they're too big for that; oh wait, Wachovia, a nationwide bank, was taken over by FDIC. The next time a bank goes under, I wonder if they will bail out the bondholders, considering all the outrage we are hearing now.

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Comment #9 by Anonymous #3 (anonymous) posted on
Anonymous #3
PDX: Actually, the drive to make everyone a potential homeowner started during the New Deal. That's why thrift charters and the Federal Home Loan Banks were created.  What got outfits like BOA in trouble was that sometime around 2000, Congress barred the regulatory agencies from regulating mortgage backed and other derivatives. This was a bi-partisan move. In a nutshell, this then led to the securitization of numerous portfolios of junk mortgages. This eventually also took down most of the large investment banks and, with them, a lot of commercial bank. Were it not for the TARP program, some of the biggies like BOA would have come crashing down as well.

In 2004, FDIC Chairman Don Powell issued a statement pronouncing the mortgage backed securities market to be healthy. He was dead wrong.  About a year later, the roof started to fall in.  Predictably, Powell is now a director of BOA. So, PDX, there goes your government conspiracy theory.

As long as we're discussing who did what, it would be useful to note that the first big real estate boom and bust occured during the Reagan administration. Carter had nothing to do with it. As part of Reagan's push to deregulate banking, Congress authorized the liberalization of rules governing the ability of thrifts to invest in real estate. The thrifts responded by over investing massively in home mortgages and commercial real estate. When the economy eventually faultered, numerous borrowers defaulted. This caused hundreds of thrifts to fail. Ultimately, in 1989, Congress passed FIRREA. This legislation was intended to facilitate the orderly liquidation of failed thrifts and to correct the lax regulation that had helped facilitate the thrift crisis. The resulting cleanup cost taxpayrers billions, but did help stabilize the banking industry untill the latest fiasco.

PDX: I hope this analysis is useful to you. If you're still in the mood to be critical of someone, there is hope for you. Virtually all of the GOP presidential contenders are advocating the repeal of Dodd-Frank. Sadly, such an action would give carte blanche to any Wall Street wunderkind who might want to use the nefarious skills he/she learned at his/her prestigious MBA school to build another house of cards like the one that arose from the mortgage backed securities disaster.

 

8
Comment #11 by pdxmale posted on
pdxmale
#9- With intent, I avoided blaming EITHER POLITICAL party, but GOVERNMENT in general. There is plenty of blame to go around.

yes, some pieces of DODD-FRANK are good and need to be retained, but there is a lot of it that is very harmful to you, me, business, and the economy.

3
Comment #10 by lou posted on
lou
The securitization of mortgages has been around since 1981. It was a well-functioning market until around 2005. There are many reasons why this market imploded, but it certainly didn't help in the 2003-05 timeframe when Fannie and Freddie began to guarantee subprime mortgages. This one action sent a stong signal to Wall Street to sell these products; why not - the govt was backstopping them. Of course, the housing finance agencies were pretty much allowed to do whatever they want because they owned the Democratic Party. If you don't believe me, ask Barney Frank.

2
Comment #13 by Anonymous posted on
Anonymous
They aren't completely eradicated.  Farmers Citizens Bank charges $0.75 (going to $1.00 on 12/1) PER transaction when using the debit card for a PIN-based purchase.  http://www.farmerscitizensbank.com/fee-schedule.html

1
Comment #14 by Jo (anonymous) posted on
Jo
The gov't and their lackeys, largely responsible in the financial sector, need to stop being psychics. Predicting that keeping the interest rates low, lower, lowest will get the rich and big corporations to create more jobs. That hasn't happened in the leaps and bounds that they thought would occur.

I don't understand why they kow-tow to the *rich*, so that when it's time for them to reciprocate it just isn't happening, and won't at all. I say "rich" because they're the ones getting very large taxbreaks in the hope they will pay it forward by putting jobs out there.

As for the mortgage bust, I am currently reading a book about how that all started. It does indeed go all the way back to when Reagan was in office. I remember my career military husband and I buying a house in late '82-'83 with an interest rate of 14.5%!!! A $96,000 home on five acres left us a mortgage amounting to over $1400. What the heck were we thinking!

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Comment #15 by pdxmale posted on
pdxmale
AND WHAT WERE THE INTEREST RATES UNDER CARTER?      long before Reagan.

In CARTER years, I was borrowing for a startup business and paying 23% interest.  Although there were some GREAT interset rates being paid on CDs.

Good or Bad ---- depends on weather you are a saver or bowower

2
Comment #16 by Anonymous posted on
Anonymous
Let's remember that it was WellsFargo and Chase in select markets, SunTrust and Regions Bank that actually disclosed and charged you a "debit card fee" per month if you use debit card for purchases. It's BankofAmerica that announced through public media that they' were planning to charge a debit cardfee per month of $5 sometime in 2012. They never performed a test pilot; they never charged a single person; and they have never finalized their terms and disclosures for it; unlike SunTrust, Regions Bank, and Chase (in the 2 test markets).

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