Credit Cards

Many Consumers Outraged by Bank of America’s Big New Debit Fee

Comments 21 Comments

Bank of America customers who use their debit cards to make purchases will be charged $5 a month, the bank announced Thursday. The news sparked widespread outrage among consumers, lawmakers and retailers. Some even encouraged consumers to boycott Bank of America, the nation’s largest bank.

“(W)e urge any and all of our 5 million monthly readers to pull any funds they may have from Bank of America in retaliation for this insanity,” Zero Hedge, a financial blog, posted within hours of the announcement.

In a statement to Reuters news service, a Bank of America spokeswoman blamed the new fee on new federal rules that limit interchange fees, which debit card issuers collect from merchants every time a purchase is made with such a card. “The economics of offering a debit card have changed,” spokeswoman Anne Pace says.

[Related Article: Day After Big Debit Fee Hike, BofA Homepage Fails]

But Senator Dick Durbin, the Illinois Democrat whose amendment to the Dodd-Frank Wall Street reform act mandated the new rules, blasted Bank of America’s decision.

“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,” Durbin said in a prepared statement. “It’s overt, unfair and I hope their customers have the final say.”

Though it’s too early to know whether a true boycott movement will take hold, many commenters on blogs and news sites suggested that they planned to remove their money from Bank of America in protest.

“42 years with BofA. Tomorrow they’re gone!” a commenter with the username “BigMamou” from Port Townsend, WA, wrote in response to a New York Times story. “They will lose 5 checking/savings accounts, a line of credit account, 3 monthly check deposits and ultimately my mortgage. I’ll bet I won’t be alone. BTW, it all goes to my local (since 1923) Credit Union.”

Others were even more direct in their criticism.

“This is lame,” a writer with the username Eric Torres said on the Los Angeles Times site. “Good bye, Bank of America.”

[Featured Tool: Get your free Credit Report Card from Credit.com]

The National Retail Federation, which lobbied for years for legislation to limit interchange fees, said the megabank’s decision reflects the fact that the nation’s debit card industry is still controlled by a few large players, including Bank of America and Citi, which issue the vast majority of cards.

“Every time Congress takes a step to protect consumers, the banks use it as an excuse to raise fees,” the federation said in a press release. “Just as merchants and consumers are about to get some relief, they’re doing it again.”

Responses were not universally negative, however. Some commenters blamed the Durbin amendment and other government regulations imposed after the 2008 financial crisis for forcing Bank of America and other banks to increase fees. Wells Fargo began testing a similar fee in August. JP Morgan Chase tested, and dropped, a $5 fee for non-Chase customers to use its ATM network in Illinois. Citigroup announced earlier in September that it will charge customers whose accounts drop below $1,500 a monthly fee of $10.

“Many of the comments suggest the bank is sort of a social service or an indefeasible right,” Valerius, a commenter on The New York Times site, wrote. “Truth is, private banks are run by private individuals who have every right to get rich however they can. This is America.”

Meanwhile, the decision drew criticism from some unexpected sources. American Banker, a banking industry trade publication, said the move may illustrate some long-term weaknesses for the nation’s largest bank. “Is Bank of America Corp. charging for debit cards because it is shortsighted or because it is too bloated to compete against smaller institutions for consumer accounts?” Jeff Horwitz, a reporter with American Banker, asked in a story published Thursday afternoon.

[Featured Product: Looking for credit cards for good credit?]

Image: Alex E. Proimos, via Flickr.com

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Teresa

    HOW DARE THEY DO THIS, I am closing my account with BOFA tomorrow

  • Teresa

    HOW DARE THEY DO THIS, they have already put hundreds of thousands in forecloresure/bankruptcy/homeless, now they want to charge us for using our own money, that they are making money on to begin with? WHAT IS WRONG WITH CORPORATE/BANKING AMERICA, god help us
    Time to use the mattress to hide money
    T

  • SummerGla

    I will be closing my BOA accounts and moving to a credit union. Everyone else should do the same or find a bank that isn’t charging and let them know that is why they are switching. Oh, & the commentator who left the following comment, ““Many of the comments suggest the bank is sort of a social service or an indefeasible right,” Valerius, a commenter on The New York Times site, wrote. “Truth is, private banks are run by private individuals who have every right to get rich however they can. This is America.” should also realize that as customers we can pull our money out when banks create fees to try to make even more money off of us. So, at the end of the day, we CAN control what they do to us–we just need to send a message that we ARE NOT GOING TO TAKE IT.

  • Aaron

    It’s time to PROTEST in front of Bank of America’s building in San Francisco!!! PROTEST BIG BANKS!!!! They were saved by the American people at the beginning of the recession. Now they are screwing us over! PROTEST!!!!!

  • Pingback: Durbin takes effect Oct. 1. Should you care? – NASDAQ | Mortgage Credit Services

  • Edwin Estrada

    White Collar Crime pure and simple. The sad thing is with exception of Dick Durban from illinois (D) of course, no elected official has said doodley squat about this.

  • Pingback: Locals brace for changes debit card fee will bring to banking industry – Kitsap Sun | Mortgage Credit Services

  • concerned

    Voice with your money!!!! Any recommendations on where to start for switching to a credit union? lists? resources?

  • Gene D

    Well I think Bank of America has finally cut off their own nose to spite their face. I worked as an Accountant and i had several customers that used Bank of America. I showed them where they were being charged for several transactions that any other bank would not charge them for and they therefore closed their accounts and moved to a more customer oriented and so several of my accounts closed out their accounts and moved to another financial institution.
    Bank of America has been taking advantage of it’s customers for years and now they have finally made the wrong move and people are not going to take it. One of our bosses had a real estate loan with the bank and they constantly were making deposits to a wrong account and then try to charge her for late payments. She finally got rid of them and has been happy ever since.
    If you have a Bank of America account(s) i recommend that you close those accounts and move to a local bank that is open for it’s customers not to see how much they can get from the customer. CLOSE YOUR BANK of AMERICA ACCOUNTS!!!!!!!!!!

  • Anna

    I switched to a Credit Union today after 17 years with Bank of America. They will lose a lot more interest off me closing my account than $5 a month. Really what it looks like to me is they have made some very poor business choices and have tried to make up for it partly by charging lavish fees to merchants for debit card use. No wonder they are worth half of what they were at the beginning of the year. There are a lot of superior options out there as far as banking is concerned, especially with credit unions (who haven’t been bailed out for handing out shady loans with high interest rates). Don’t get mad, get out…they only have the power we give them.

  • Anna

    BECU is good as far as Credit Unions go…

  • K.Dodd

    Close down the BUMS…………

  • http://Bankofamericasucks.com Power in Numbers

    So the CEO of Bank of America said they have a “the right to make a profit”, this is true. But they do not have the right to make an absolute killing off hurting the poor and the weak. They act like that have not been making a killing for years off the sweat and pain if the poor. Their little fees really ad up and that is how they think banking should be. The worst off you are the more they hurt you, this is wrong.

    I closed all my Bank of America accounts today and I will never, ever bank with them again.

  • Pingback: Bank of America, Adam Smith and a Fee Market System « Heptanews * Entertainment * Politics * Opinions * U.S. * Technology * Health * Leisure * World * Sports

  • Pingback: Here’s Why We See More Fees In Your Debit Card’s Future | The Garden of Princess Aileen 心灵的驿站

  • Small Business Owner

    Do the math and you’ll see that BofA is using Durbin as an excuse to jack up fees to consumers. The $60 annual fee is a $1.67 BILLION dollar profit windfall.

    Fees BofA charges to retailers will shrink from AT LEAST 44 cents to a MAXIMUM cap of 24 cents for an average debit card transaction. That’s a revenue reduction of 20 cents per debit transaction. These are Visa’s numbers, not mine.

    If the “average” BofA debit card holder make 300 debit card transactions per year, then BofA might be able to justify the $60 fee (twenty cents lost revenue times 300 transactions equals $60). The Federal Reserve says fewer than 1% of consumers use their debit card more than 300 times a year.

    The Federal Reserve stats show the average debit card customer uses their debit card about 84 times a year. Twenty cents times 84 transactions is $16.80. BofA has effectively dinged you $43.20 ($60 minus $16.80), while blaming your neighborhood dry cleaner for the fuss.

    BofA says 38.7 million people carry Bank of America debit cards, which means Bank of America will earn an extra $1.67 BILLION dollars MORE than pre-Durbin.

    The bottom-line is that Durbin is doing exactly what retailers wanted all along: Durbin has lifted the secret veil and put these abusive fees in front of consumers.

    Thanks to Durbin, my business will save money. And yes, I am passing the savings on to my customers.

  • Pingback: Adam Levin: Bank of America, Adam Smith and a Fee Market System | PUII - News Blog

  • Pingback: Adam Levin: Bank of America, Adam Smith and a Fee Market System | FDA Trades

  • Pingback: Adam Levin: Bank of America, Adam Smith and a Fee Market System

  • Pingback: Adam Levin: Bank of America, Adam Smith and a Fee Market System | Leeds Classifieds

  • Pingback: Adam Levin: Bank of America, Adam Smith and a Fee Market System | BNewsworld

  • http://supersentaiimages.blogspot.com/ Kandou Erik

    I am disabled and am on a fixed income, so a $5 fee is a real concern to me.

    I was considering just changing my spending habits, and use credit cards and cash to buy things (to avoid the fee) – but I keep feeling that it’s a moral obligation to hurt Bank of America, any way you can – and if that means taking my money elsewhere, then so be it.

  • minor

    well….Im down with boycott!!! I’m closing my account this week!!!!

  • MCantin

    I pulled my accounts away from Bank of America over a year ago do to fees. But I don’t feel the $5 is a crime. I use my Bank card at least once a day somewhere. Thats at least 300 times a year. I think if you stop and think we do use these cards for almost every purchase. So the big bad banks now will lose billions in retailer fees. So are the big bad retailers dropping their prices do to this? doubt it.. Also I don’t believe the fed reserve that the average person use’s their debit card 84 times a year. Thats way to low. Thats less than twice a week come on. really? Keep in mind if you were a employee with Bank of America and owe stock would you be mad to see your stock drop and your CEO do nothing to fix it? I am a average person who owns stock in the company I work for. It would tick me off if the CEO did not do his by the way Legal obligation to do whats right in the eyes of the stock holders, which are not just rich fat cats. But a local person working hard at his or her job.
    With that said ” stop protesting stop yelling. It is easy shop for a new bank. Their are tones to chose from.” I believe they should be able to charge what ever they want..But it is your right as a american to shop for a better deal..

  • Paddy

    I started my departure from BOA today. Once my electronic deposits are transferred, I’m done.

  • Beauty08

    Asof tomorrow, I’m taking my $$ to my local credit union. This is an outrage!.

  • Dee

    On top of their greed, my son, who started working after graduating college went to cancel his debit card at BofA and transfer some of his money to his credit union, and BofA did not have enough to give him cash and told him he would have to pay $10 for a cashiers check (money orders cost the same). Across the street at CVS a money order costs $1. He has had this account since elementary school. They harrassed him about leaving and asked him why. He said he gets life time free checking and $50 to open an account. The cashier at BofA said isn’t our loyality to you worth $50? He said not when you are charging me $10 to take out my money when YOU are the one that does not have the cash. BofA has not changed since I graduated college – and I warned him about that when he wanted to set up the account. They charged my grandmother for currency exchange rate and money order when she sent me a money order for my wedding. BofA charged me again to cash it – like $50 and I said Never again. Now he has said NEVER again will he bank with BofA too. This is shameful and should be illegal. Not like he has thousands of dollars here.

  • Aieko

    Closed my account Monday and opened with a local bank who smiled when I told her why. BOA – she thanks you for their new customer! I hope you lose millions of customers you never deserved having in the first place.

  • Pingback: Adam Levin: I'm a One Percenter Who's Pre-Occupied with Wall Street

  • Pingback: Adam Levin: I’m a One Percenter Who’s Pre-Occupied with Wall Street | Finance International

  • Jack Black

    Out of all the comments, the one question not asked but one I would like to know is — How many five dollar monthly fees for debit- card use will take to full-fill the BoA top executives (greedy) bonuses for 2011 & beyond? Bonuses I’m not convinced they actually earned, after {demanding} tax payers bail-out of their illegal insurance deals (known as-credit default swaps) ???

  • Pingback: Wikileaks Muzzled by Donations Blockade « ecocho.org

  • Frank

    Closed my BOA account yesterday and went with local credit union. I get interest now on my checking and savings that is 4 times more than BOA provided only on my savings account. Credit union was happy to have me!

Find out where you stand.
Get your FREE personalized credit report card.

Sign Up Now
X

Stay Connected to Our Experts

Please submit your email address to get credit & money tips & advice
from our team of 30+ experts, delivered weekly to your inbox.