Bank of America backs down on $5 debit card fee
NEW YORK (AP) – Bank of America Corp. is scrapping its plan to charge a $5 monthly fee for debit card purchases after outraged customers threatened an exodus.
The about-face comes as customers across the country petitioned the bank and mobilized to close their accounts in favor of credit unions and community banks. The outcry prompted other major banks, including JPMorgan Chase & Co. and Wells Fargo & Co., to cancel trial tests of their own debit card fees.
Bank of America, the nation’s second largest bank, said it reversed course after listening to an outcry from customers. Anne Pace, a spokeswoman for Bank of America, declined to say whether there was a spike in account closures following the September announcement that it would start charging the fee early next year.
Higher fees have become a fact of life for bank customers in recent years. But this one touched a nerve because it hit so close to home; many Americans have come to rely on debit cards to manage essential expenses such as groceries and gas.
At the same time, there’s still lingering resentment over the role that banks played in the 2008 financial meltdown and the ongoing home foreclosure crisis. That anger has come to surface in recent weeks with the Occupy Wall Street movement.
The banks have countered by saying that efforts in the past two years to regulate the industry have forced them to raise or introduce new fees to stay profitable. That made the march to higher fees seem almost inevitable – and makes the rare victory by consumers in this case even more remarkable.
“When I heard about the fee, it was the last straw for me,” said Molly Katchpole, a 22-year-old nanny whose online petition urging Bank of America to drop the debit fee captured more than 300,000 signatures. “I’m living paycheck to paycheck and one more fee was just too much.”
Katchpole said she already closed her account and moved her money to a community bank in Washington, D.C. For her, the damage has been done. She said Bank of America’s decision won’t win her back.
It’s still too early to say whether the bank’s gross miscalculation of consumer sentiment will have a lasting impact. But Bank of America is also dealing with a host of other troubles, including the potential for large mortgage-related settlements to drain its capital and plans to cut 30,000 jobs to reduce expenses. Last quarter, the company lost its standing as the nation’s largest bank by deposits to Chase.