Bank of America is reconsidering its controversial move to charge monthly debit card fees after a wave of other big banks have dropped the idea. JP Morgan Chase and Citigroup as well as several other major banks have all shied away from the fees which have sparked widespread consumer anger.
Transparent fees are important for customers, and too often consumers of credit cards and other financial services are hit with hidden fees they never even know about. Swipe fees have long been the hidden cost in many consumer purchases. These hidden fees are charged directly to retailers whenever someone uses a debit card, and that cost is passed on to customers. The recent Dodd-Frank financial reform bill placed a cap on how high these swipe fees could be, a move which could cost banks billions of dollars in lost revenue. Billions more will be lost due to caps on overdraft fees.
To replace this revenue stream, Bank of America opted for a new monthly fee for all debit card users, and suddenly the cat was out of the bag. Everyone had already been paying these fees, they just didn’t know it. After financial reform, those fees were upfront: they were transparent and open to criticism. And Bank of America’s customers were furious. They were angry enough to scare off most of the other large banks, and the anger even helped fuel the current Occupy Wall Street protests.
Greedy banker took on a whole new meaning – again. After the financial crash of 2008 and the unpopular bailouts, the last thing banks need is an unpopular debit fee program, which makes the move all the more inexplicable.
Critics of the fees included many politicians and consumer advocates. Even president Obama denounced the fees. Rep. Dick Durbin, whose amendment to the Frank-Dodd bill is responsible for the swipe fee caps, said he hoped Bank of America customers would “have the final say.”
“It’s time for Bank of America to listen to its customers who are saying loud and clear, ‘Drop the fee or we’ll drop you,’” Norma Garcia of the Consumers Union said in a statement. “All banks that are considering debit card fees should ditch those plans.” Apparently Bank of America is listening.
Under the still vague new plan, Bank of America customers who hold Bank of America credit cards, directly deposit wages into the bank or hold a minimum balance will not be charged a fee. Whether that balance will still be the whopping $20,000 remains to be seen, but it appears likely that the bank will lower that amount. At this point no firm details are available.