Citing “customer feedback and the changing competitive marketplace,” Bank of America today announced it will drop plans to impose a $5 monthly debit card user fee, becoming the latest banking giant to back away from the highly unpopular charges.
“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” said David Darnell, co-chief operating officer for Bank of America, one of the world’s largest financial institutions boasting 58 million clients worldwide. “Our customers’ voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”
Yesterday Atlanta-based SunTrust Banks Inc. announced it will eliminate a monthly debit card fee for its Everyday Checking account effective November 2, and will fully refund clients who have incurred a fee. SunTrust shared the media spotlight yesterday with Regions Financial Corp, which said it will eliminate its monthly debit card user fee for all accounts effective today, and will refund any fees charge by crediting clients’ accounts by November 4. Regions describes itself as a full-service provider of banking, trust, securities brokerage, mortgage and insurance products and services across 16 states in the South and Midwest, including Texas.
Last week Wells Fargo and Co. announced it was cancelling its planned five-state pilot of a monthly $3 fee to debit card users due to customer backlash. JP Morgan Chase decided not to charge its customers a $3 monthly debit card fee after a running an eight-month pilot test for the charges in Wisconsin and Georgia, according to ConsumerReports.org.
Chase joins U.S. Bancorp, Citigroup, PNC Financial Services Group and KeyCorp announcing it will not impose monthly user fees on debit cards, said Consumer Reports. The website notes that its advocacy arm, the Consumers Union, opposes the fees.
“It’s unfair for banks to stick consumers with a monthly fee just to use their own money,” said Norma Garcia, manager of the Consumers Union financial services program. “The banks that charge debit card fees risk losing customers who are fed up with financial institutions that got bailed out that are now turning around and hiking fees.”
Garcia may have a point. As banks back down from highly unpopular fees, credit unions are reporting significant hikes in new members and membership inquiries since September 28, the day Bank of America announced its $5 user fee. “Some consumers are switching to credit unions and community banks to avoid the big-bank fees,” said the Credit Union National Association (CUNA) in a prepared statement. For example, SAFE CU, a credit union with $1.8 billion in assets based in North Highlands, CA, reported a 54 percent increase in online account applications from September to October. The CUNA consumer website, aSmarterChoice.org, saw its traffic double to roughly 36,000 visitors from September 29 to October 9.