Tuesday, November 1, 2011
Bank of America, the country’s second largest bank, has dropped plans to charge a $5 monthly fee for debit cards after a nationwide backlash from customers and lawmakers.
“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” David Darnell, co-chief operating officer, said in a statement from the Charlotte, North Carolina-based lender today. “As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”
BofA said its u-turn was a “response to customer feedback and the changing competitive marketplace”. Analysts had worried that BofA could see deposits shift to other banks, denying it a source of liquidity strength.
On Monday, SunTrust and Regions Bank announced that they have abandoned plans to charge customers a debit card fee. On Friday, Wells Fargo announced that it has canceled plans to test a debit card fee in five states. Before today’s announcement, Bank of America was the only big bank still planning to levy the fee on some customers next year.
Banks have blamed the new fees on a regulation that slashed the fees financial institutions can charge retailers whenever consumers use their debit cards. The regulation exempted banks and credit unions with assets of less than $10 billion.
Richard Durbin, the Democratic senator from Illinois who originally proposed the fee cap, had blasted BofA, whose fee was the first to be announced. President Barack Obama said it was the sort of activity that should be stopped and banks “don’t have some inherent right just to get a certain amount of profit”. The banks’ proposals also attracted the ire of liberal groups and Occupy Wall Street protesters.