Most megabanks are quickly backing off plans to charge customers a monthly fee to use a debit card, but the damage may already be done.
The largest credit unions in Tampa Bay, capitalizing on consumer outrage, are reporting a surge in new members who have dumped their banks.
Tampa-based Suncoast Schools Federal Credit Union, the biggest credit union in Florida and 13th largest in the country, says it has signed up more checking account customers this past month than the entire second half of 2010. In its "Make the Switch" promotion ending Saturday, it's offering new checking account customers a chance to win an iPad.
GTE Federal Credit Union of Tampa has seen a 31 percent increase in new member applications over the last four weeks. Earlier, GTE launched a Memberfest and it's offering to pay debit card users $5 a month.
Grow Financial Federal Credit Union of Tampa has posted a 120 percent increase in checking account openings compared to a year ago, with openings jumping 38 percent just over the past month.
"I'd attribute it to a significant (degree) with frustration … whether with the bank fees in general or the new debit card fees," said Wes Strickland, Grow Financial's senior vice president of marketing.
The unions are tapping not only into the debit card debacle, but also the anti-big-bank-bailout theme at the Occupy Wall Street protest movement. They're also seizing on Facebook-based "Bank Transfer Day," a viral movement urging bank customers to switch to credit unions on Saturday.
Representatives of GTE Federal Credit Union said this may be the most meaningful time for credit unions since they were grouped under a national charter through the Federal Credit Union Act of 1934. At least, they said, it's the biggest opportunity in a long time to advertise differences between banks and credit unions.
"In the past, customers have allowed big banks to get away with penalizing practices," said Joe Brancucci, GTE credit union's president and CEO. "Maybe (that was) because it looked cumbersome to make the switch, maybe people think it requires a special affiliation to join a credit union, or maybe the bank just gave them a free iPod."
Banks began charging debit usage fees in reaction to new government regulations that effectively cut in half the revenue that large banks receive through debit card interchange fees.
Bank of America's plan to charge $5 a month for debit card purchases starting in 2012 triggered the most consumer unrest, but it wasn't alone in testing or implementing the new fees.
Nor was it alone in back-pedaling.
On Monday, both SunTrust Bank and Regions Bank said they will stop charging a fee for using their debit cards and will return fees they've already collected to customers. JPMorgan Chase and Wells Fargo both indicated late last week that they don't plan to move forward with their debit fee test programs. And Bank of America is considering offering ways that customers can avoid the debit fee through using direct deposit, maintaining minimum balances or using Bank of America credit cards.
"This is great news for consumers, but this is not the end of new fees," said Bill Hardekopf, CEO of LowCards.com, which tracks bank practices. "Banks are still losing billions of dollars in revenue from the interchange fee regulations. They will find more subtle ways to make up for this lost revenue, increases that may fly under the radar."
Jeff Harrington can be reached at [email protected]