After Wells Fargo, Chase Bank, SunTrust Bank, and Regions Bank dropped their plans for debit card fees yesterday, the largest bank in the United States, the only bank holding onto its policy of eliminating unprofitable customers by annoying them with inconvenient fees, dropped their own plans to enact a $5 monthly debit card fee in 2012.
The Wall Street Journal is reporting that thanks to customer backlash and likely due to a public relations nightmare, the bank is reversing its policy. It’s a smart move, but is it too late? Bank of America has done a great job burning an imagine in customers’ minds of a bank that is willing to sacrifice its customers — not to recover from a potential loss, but to recover from a lower profit due to regulators’ new rules against excessive interchange fees. Corporations are expected to look for profit under every rock, but this particular type of fee hurts low-income customers much more than high-income customers. You would have been able to avoid the potential fee by having a significant balance of deposits held at the bank, much more than the typical customer might hold.
On Twitter, Michael Kitces from kitces.com said in response to my comment about the fee cancellation, “I think people that BoA didn’t want as customers still got the message loud & clear, even if BoA drops the fee now.” Kyle from Amateur Asset Allocator responded, “Doesn’t affect my attitude one way or another. If I were affected, I’d probably just go to cash-only instead of using the debit card.”
This doesn’t affect plans for Bank Transfer Day. This fee could have been the wake-up call consumers needed to gain the extra motivation to move to a credit union. As we’ve seen with the interchange fee regulation, a window of potential profit closed in one area leads to another window opening somewhere else. Bank of America and the other banks who dropped plans for a debit card fee will find a way to earn their profits, and the next fee may not be nearly as transparent and well-marketed as the debit card fee.
Keep an eye on those bank statements.
Updated June 23, 2016 and originally published November 1, 2011.