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More Banks Drop Debit Card Fees

This article was written by in Banking. 3 comments.


Consumer outrage and backlash does work, apparently. Wells Fargo Bank and Chase Bank have been testing debit card fees in a small number of locations within the United States, but due to the anger unleashed after the largest bank, Bank of America, announced it would add a $5 debit card fee in 2012, the two smaller (but still very large) banks backpedaled. Wells Fargo and Chase are unwinding their test plans, and the bank executives have decided not to continue charging more customers for the benefit of accessing their own funds on deposit.

Chase BankA customer who deposits cash in a checking or savings account has been traditionally doing the banks a favor by allowing them to initiate loans based on the funds held in deposit. In return of this favor, banks paid depositors interest. With banks not lending as much as they have in the past, banks are in no rush to acquire depositors. Thus, they can pay much less interest and increase fees. They’re happy to drive customers away.

Bank spokespeople also cite new regulations as rationalization for new fees. Particularly, the interchange fees banks charge retailers for accepting debit cards at the point of sale are now limited. In effect, banks are switching revenue-generation from retailers to depositors. With this new swipe fee regulation, retailers are now more protected than consumers.

Bank of America’s new debit card fee policy stirred public unrest, and from a public relations standpoint, Chase and Wells Fargo would do well to avoid more public outrage. That won’t be the end of this story for Wells Fargo and Chase. Corporations need to answer to their shareholders, and investors will not want to see a bank willingly part with revenue potential. While the banks are still making great profits in a “post-bailout” environment, expect the executives to tap another source. Be on the look-out for new fees now that certain banks are avoiding debit card fees.

Related: See my article, “The Bank-Fee Wake-Up Call,” on US News & World Report’s “My Money” blog.

Update: In response to the announcements from Wells Fargo and Chase, Bank of America offers a response. The bank will revamp its debit card fees, presumably by lowering the $20,000 minimum to avoid the monthly debit card fee. The bank has not made a decision, though, and unless the bank sees a mass exodus, expect the $5 debit card fee in 2012.

Second update: The finance industry, minus Bank of America, is continuing to listen to customers. SunTrust and Regions Bank have announced that their customers will no longer be subject to the new debit card fees. This leaves Bank of America on its own. Will the largest bank buckle?

Photo: neoliminal
Reuters

Updated June 23, 2014 and originally published October 31, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 3 comments… read them below or add one }

avatar shellye ♦107 (Cent)

This really is the straw that broke the camel’s back. I think consumers are waking up to the fact that they are being nickel-and-dimed for the most basic transactions and they’ve finally had enough. I am curious as to how long banks will pretend to listen to their customers before they find another sneaky way to charge ridiculous fees.

Kudos to Kristen Christian for organizing the Bank Transfer Day movement!

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avatar wylerassociate ♦162 (Cent)

It’s good that banks are realizing that the days of walking over their customers with more fees are over. As far as BofA is concerned, their CEO & leadership are delusional but I think they will scale back on some fees although I still think they will keep the debit card fee.

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avatar qixx ♦1,880 (Half-Dollar)

The days of walking over their customers is not over. Wells Fargo implemented a total of 15 new or increased fees to my account over the last 3 months. And i was not in the Debit Fee test area. Fees that are only introduced and explained as part of the monthly statement. They are only stopping their plans on this one very high profile fee change. The other fees are still rolling forward. I’d expect these large banks to continue to tack on fee after fee and like here only remove or stop the fees that generate large press. I’ve seen no articles on these other new or increased fees and they are still there.

I hope Flexo still continues to suggest people move from these large banks.

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