Bank of America Capitulates on Monthly Debit Card Fee
After a massive public outcry and incredible damage to their brand, Bank of America has capitulated and is scrapping plans to implement a monthly $5 fee for debit card use.
The move from Bank of America was widely expected after other major banks announced that they were terminating plans to implement a similar monthly fee on debit cards used for purchases. JP Morgan Chase and Wells Fargo decided to scrap their test programs, while other banks said that they would be getting rid of their monthly fees on debit cards and reimbursing customers.
This left Bank of America flailing in the wind - with other banks pulling out, Bank of America couldn't have possibly continued with their plans to implement a $5/month fee. The major banks had to uniformly implement a monthly fee or else it wouldn't have worked. Once the first few banks started publicly scrapping the plan, the rest soon followed.
Banks have been scrambling to replace the revenues that were lost as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This Act capped the amount of "swipe fees" (fees paid by merchants to banks every time somebody pays for something with a debit card) that banks could charge merchants. According to various industry sources, this cap will cost banks roughly $10 billion/year.
A monthly fee on debit card use was seen by banks as a way to recoup this lost revenue. Unfortunately for the banks, the public outcry against these debit card fees (especially Bank of America's egregiously high $5/month fee) was so severe that they had to eventually scrap their plans.
Don't fret though - banks will bounce back with another plan to get some more of your money soon enough. I guarantee you that they are sitting in their war rooms right now, dreaming up possible fees.
Filed under: General Market News