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Bank of America Abandons Monthly Debit Card Fee

By Martin Harris in Banking
November 1st, 2011

Due to the outpour of consumers voicing their opinion over a proposed monthly debit card usage fee, Bank of America has abandoned it’s plan before it started.

No FeesA little over a month ago, Wealth Watching brought you the news - Bank of America to Charge Customers $5 Monthly Debit Card Usage Fee and the response from banking consumers was overwhelming.

Read my lips… NO NEW BANKING FEES !!

Armed with the power of the internet, irate banking customers flocked to Twitter, Facebook, blogs and anywhere their voices could be heard to express disdain over Bank of America’s proposed $5 monthly debit card usage fee.

It seems Bank of America executives listened, but only after other large banks released statements that they would not impose similar fees. JPMorgan Chase, SunTrust, Wells Fargo and Regions have all scrapped their plans to charge fees for debit card use.

Bank of America released their official statement on Tuesday that it would be abandoning it’s plan to charge a $5 monthly fee to use their debit cards.

“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 at Bank of America, said in a statement. “As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”

The debit card fee was originally supposed to have gone into effect in January 2012.

Maybe these corporate ghouls learned a thing or two (very doubtful) from Netflix, who lost over 800,000 customer due to rate hikes. People just aren’t willing to pay for excessive corporate greed in these troubled economic times and people are tired of being fleeced for services that were initially offered for free.



Bank of America to Charge Customers $5 Monthly Debit Card Usage Fee

By Martin Harris in Banking
September 30th, 2011

It’s going to cost you more to access your own money if you’re a Bank of America customer and use a debit card thanks to a new monthly fee.

bank of America FeesIn a move that is certain to enrage consumers and enrich banking institutions, Bank of America has announced they will start charging customers a $5 monthly debit card fee starting early next year.

They’re not alone. Other national banks, Chase and Wells Fargo are also testing similar fees in select markets. Regional banks SunTrust and Regions Financial have also announced monthly debit card fees that go into effect later this year.

Sen. Dick Durbin slammed Bank of America over the announcement, saying “It seems that old habits die hard for Bank of America. After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers.”

The decision has drawn much criticism as Bank of America was one of the largest recipients of US taxpayer bailouts, totalling $45 billion in federal bailout money in 2008 and 2009 to deal with losses at Merrill Lynch.

Durbin also added, “Banks that try to make up their excess profits off the backs of their customers will finally learn how a competitive market works.”

The new Bank of America debit card usage fee will apply to basic accounts and will be in addition to any existing monthly service fees charged to account holders.



Federal Reserve Raises Cap on Debit Card Swipes

By Martin Harris in Banking, Credit Cards
June 30th, 2011

The Federal Reserve has raised the proposed cap on banks for debit card transactions from 12 cents per transaction to as much as 24 cents per debit card transaction.

Debit Card Swipe

After much deliberation, financial institutions and their lobbyists won major concessions to the Federal Reserve’s proposal for capping what banks could collect on debit card swipe fees.

Originally, the fees were to be capped at 12 cents per transaction but the Fed issued a final ruling on June 29 that will raise the cap to 21 cents per transaction.

This new ruling gives additional concessions to banks where card issuers can charge an additional cent to each transaction if the institution can show it has a substantial fraud protection systems in place. The additional transaction fees potentially raise the cap to 24 cents per transaction.

In a related article, JP Morgan analyst Tien-tsin Huang explains why the change in swipe fees is good for Visa and Mastercard :

* The 21 cents cap on swipe fee has weakened the case for a reduction in network fees for card issuers which has hurt Visa and MasterCard shares for over a year.

* The Fed has banned banks form routing debit card transactions through any one payments network. The new rules require at least one unaffiliated network on all debit cards. Issuers could satisfy this requirement by adding an independent PIN network which is great for Visa because of its dominant market share, but it could also mean higher share for Mastercard.

* The interchange cap of 21 cents was higher than the 12 cents proposed by regulars last year, and makes room for an additional charge to cover fraud. Network fees earned by Visa and Mastercard are now part of a list of recoverable expenses. This would weaken the case for a dramatic reduction in card issuer network fees.

So what does this news mean for consumers?

The average consumer probably won’t notice any difference as the new fee structure only applies to fees charged to merchants for accepting credit and debit cards. While it may result in increased prices wherever credit and debit cards are accepted (which is everywhere), the offest is not likely to cause alarm.


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