Having incensed customers, inspired nationwide consumer protests, and inadvertently given community banks and credit unions a bonanza of free marketing opportunities, Bank of America, Wells Fargo, JPMorgan Chase and SunTrust Banks Inc. are dumping monthly debit card fees.
BofA was supposed to begin its much-maligned $5-a-month fee for debit card use in 2012, but after having “listened to our customers very closely,” the bank decided to drop its plans, Bloomberg reports. Wells Fargo and Chase, meanwhile, have suspended pilot debit card fee programs, and SunTrust is abandoning a monthly fee it put into effect in June, according to the AP.
The fees came as a response to federal regulations that put a limit on the amount of money banks can collect from retailers in “swipe fees” imposed every time a consumer makes a debit card transaction. To recoup the billions large banks would lose under the new policies, banks shifted the burden onto consumers.
In recent weeks, a movement encouraging people to transfer their money away from mega-banks and toward community banks and credit unions that could help them avoid fees coalesced amid street protests and online. The Move Your Money project offers an online tool for finding a new financial institution; Nov. 5 is a designated “Bank Transfer Day.”
Credit unions are gearing up for the potential barrage of new customers. In the last month, traffic to The National Association of Federal Credit Unions’ online credit union locator was up 350 percent, according to The Washington Post. The momentum isn’t expected to die down, says Credit Union Times.
Bill Handel, the vice president of research and product development at Raddon Financial Group in Chicago, tells the publication that “the difference between the mega-banks and community-based financial institutions was significant even prior to the imposition of debit card fees and so the imposition of these fees was a means by which this difference could be driven home.”
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Jamie Pietras Contributing editor for Credit.com, Jamie's work has appeared in publications including New York magazine, Time Out New York, and The Writer. A graduate of Columbia University’s MFA program in nonfiction writing, he has also worked in e-learning, contributed to various trade publications, and written and edited young adult nonfiction. Reach Jamie via email at jamie (at) credit.com.