Bank of America was the last of the top five banks to rescind their debit card fee going into effect January 1.
“For a lot of consumers, this was the last straw,” said Jean Ann Fox, director of financial services for the Washington- based Consumer Federation of America. “Banks have been making a lot of changes to accounts, adding fees and raising the minimum balance needed, and consumers were clear that they objected to one more fee.”
- Bank of America reversed course after rivals including JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) decided against similar charges, leaving the Charlotte, North Carolina-based firm the only U.S. lender among the biggest five with plans to introduce the fee. Citigroup Inc. (C) and U.S. Bancorp had already rejected the idea, while SunTrust Banks Inc. (STI) and Regions Financial Corp. eliminated their check-card fees yesterday.
- Card issuers must seek other ways to replace revenue lost after the U.S. capped fees on debit-card purchases last month at about half the previous level. The limits, mandated by the Dodd- Frank Act, may cut annual revenue by $8 billion at the biggest U.S. banks, according to data compiled by Bloomberg Government.
Like any other business they need to make a profit to support their employees, and shareholders. No profit, No jobs…so as usual these are tough issues and tough decisions. Banks will seek other avenues to ensure they maintain their profitability. While the focus has been on big banks, there are numerous smaller banks who were not going to charge their customers for the use of debit cards. However, the attention from the media has highlighted this issue. This has driven customers to Credit Unions who are not for profit institutions, who typically are not as much fee driven.