Abandoned by bank peers on debit card fee, will Bank of America blink?
Bank of America has a major image problem. Above, protesters with "Occupy Seattle" movement burn a BofA America debit card as they protest in downtown Seattle in October. (AP photo)
Wake up and good morning. Is it coincidence that the Great Debit Card Fee Reversal happened on Halloween? While the credit union industry "treated" the public and triumphed in marketing itself to America as the UnBanks That Don't Charge Debit Card Fees, major banks that had "tricked" consumers by charging debit card fees or considering it -- that includes SunTrust, Regions, Wells Fargo and JPMorgan Chase -- backed off those plans and killed their fees.
Only Bank of America, lately the banking industry's poster child of ill-timed marketing and stubborn pride, remains among the big banks with its $5 debit card fee.
So what's it going to be, BofA? Will you take the Lone Wolf path as the only megabank perceived as gouging the public with a monthly $5 fee on debit card use? Will you keep the fee but soft-sell the idea that the bank's now lowering the threshold of services that must be kept at the bank (direct deposit of paychecks or minimum balances) to excuse customers from the fee? Or will you bite the bullet and kill the fee, which frankly was a foolish move in the first place?
"I'll be surprised if BofA simply stays the course as its customers close accounts and rip the financial giant for its handling of the situation," blogs Bankrate.com's Dave McMillin.
What we end up with is a Game of Fee Chicken with Bank of America. My guess is BofA will find keeping its $5 fee expensive. It's hit a national nerve (kind of like Occupy Wall Street) with enough consumers who are tired of getting nickel and dimed or, in this case, paying $60 a year to use a debit card.
Part of BofA's challenge is the remarkable lack of goodwill it currently has with the U.S. public. That magnifies the public scorn and backlash on the debit card pricing.
"Banks wouldn’t be backpedaling if it were only the unprofitable customers that were leaving," Greg McBride, senior financial analyst for Bankrate.com, told the Atlanta Journal-Constitution. His advice? Keep watch for an "upward creep" in other fees such as ATM usage or monthly account maintenance. And banks might put up new hurdles to keep checking free, McBride said.
This Atlantic magazine story wraps up things nicely. Banks will find a way to charge consumers, one way or the other: "So maybe banks really do listen to their customers. Will they escape new fees after all? That isn't likely. These banks still have the same costs of business to pay for and shareholders to pacify. Anyone who think that banks will just shrug as Congress attempts to cut their revenues by billions of dollars is rather naive."
-- Robert Trigaux, Business Columnist, St. Petersburg Times