Yeah, these “poor” banks need to look for new ways to increase revenues, after all, the hundreds of millions of dollars being thrown at them by Washington after they stripped the American public clean apparently isn’t enough! What is happening to this country? If this continues we’re going to revert to the days of the Wild, Wild West! TGO
Refer to story below. Source: Reuters
By Joe Rauch | Reuters
CHARLOTTE (Reuters) – Bank of America Corp plans to charge customers who use their debit cards to make purchases a $5 monthly fee beginning early next year, joining other banks scrambling for new sources of revenue.
U.S. banks have been looking for ways to increase revenue as regulations introduced since the financial crisis limited the use of overdraft and other fees.
The Dodd-Frank Act’s Durbin amendment, due to go into effect on October 1, caps fees banks can charge merchants for processing debit card transactions at 21 cents per transaction from an average of 44 cents, potentially costing banks billions of dollars.
Banks also face broader operational challenges as low interest rates and higher capital requirements hit profitability, and the sluggish economy depresses loan demand.
Other large U.S. banks including Wells Fargo & Co, JPMorgan Chase & Co and SunTrust Banks Inc are testing or planning monthly debit card fees.
“The economics of offering a debit card have changed,” Bank of America spokeswoman Anne Pace said on Thursday. Bank of America is the largest U.S. bank by assets.
Senator Richard Durbin, architect of debit card interchange fee reform, bashed the proposed monthly fee. “Bank of America is trying to find new ways to pad their profits by sticking it to its customers,” he said in a statement. It’s overt, unfair, and I hope their customers have the final say.”
A FEE TOO FAR?
Even before introduction of the Durbin amendment’s rules on debit fees, Bank of America’s fee income was dropping at its deposits and card services units. The bank’s deposits unit reported fee income of $1 billion in the second quarter of 2011, down 34 percent from $1.5 billion a year before.
Card services, which includes the bank’s credit and debit card operations, reported fee income of $1.9 billion, down 23 percent from $2.5 billion in second quarter 2010.
“This might be a fee too far,” said Ed Mierzwinski, director of the consumer program for the U.S. PIRG, a federation of state public interest research groups.
Mierzwinski said such fees could push customers to smaller banks that have not introduced checking and debit-related fees.
Pace said customers expect certain features for their accounts, like overdraft and fraud protection, and the fee would offset some of those costs.
The fee will be waived for the bank’s premium or platinum privileges accounts tied to its Merrill Lynch brokerage. It will also not be charged for using the card to access the bank’s ATMs, Pace said.
She declined to say how much the bank expects to earn through these fees or how many customers would be affected.
Some banks have pushed back against debit fees.
Citigroup Inc said earlier this month that it would not impose debit card usage fees as part of a broader account restructuring.
The head of banking products for Citi’s U.S. consumer bank said customers had told the bank that a debit card fee would be “a huge source of irritation.”
(Reporting by Joe Rauch in Charlotte, North Carolina, editing by Gerald E. McCormick)
It has always been more convenient for someone else to wash your car but don’t expect someone else to wash it for free and the same goes for any other service. What actually got us in this mess IS capitalism and that irresistible consumerism. There are things that you will never be able to stop consuming because life itself requires them – like food. Banking services just is not one of those services required for survival.
Fuck the banks – don’t use credit OR debit. period.
I have been doing it for years and still am alive. Even back in 2005 while our economy was certainly just about at it’s healthiest in history, I traveled over 300 miles with almost 10 gs in cash – which took me awhile to save – to buy a motorcycle. Would it have been more convenient using the standard practices that our capitalistic system not only taught us but highly favors? But, of course. But here still I am alive so apparently it is not a choice that will kill you. BTW, I then proceeded to ride it back home instead of paying over 5 c-notes in shipping fees.
Capitalism and all it’s trappings coupled with that irresistible consumerism may have afforded us more comfy lives than our parents or previous generations enjoyed BUT it also turned us into bigger pussyies.
GHOSTRIDER WISDOM….That’s my story and I’m sticking to it!
Got a wild and crazy idea: Use cash.
That’s brilliant advice, but ATMs are for withdrawing cash. Any other suggestions?
Not sure I unederstand your reply. They’re only charging the fee on people who make purchases with the card, not on ATM withdrawals. In any case, there are credit unions that the banks hate because they’re usually much friendlier to the customer in some ways, fees, for instance.
I agree; my comment was a sarcastic one. I may be wrong, but one trend that seems consistent is that once a business (any business) imposes a fee the following occurs:
1) That fee generally increases.
2) That fee is subsequently extended to other services that were previously free of charge.
Many people use debit cards as they are very convenient, especially for large purchases. People who prefer to refrain from using credit cards carry debit cards when purchasing items such as computers, TV and stereo equipment, etc. They may not want to charge a particular item but don’t feel safe carrying several hundred dollars with them. Or, they may have gone into a store and seen an item at a significantly reduced sale price and decide to make an “on the spot’ purchase, and so they turn to their debit card. The point is that banks have done extensive research on this and they are well aware that they’re going to make a bundle of money on these types of fees.
It is these same banks which created the economic crisis we’re currently in that want to add fees for their services, and it is these same banks that were bailed out by our federal government. Me personally, every time I hear the word ‘fee’ with reference to banking, I cringe. Anyway, that’s my view on the matter.
You’ve brought up the biggest consumer trap of all: impulse buying. If you haven’t thought about a large purchase long enough to go get money out of the bank for it, maybe you shouldn’t be buying it.
There’s also writing a check, which might also carry a fee or two, but usually not with a minimum balance.
Again, you’re absolutely right, impulse buying is definitely something to avoid. But let’s face it, we’re all guilty of it (at least I am) and the banks know this. Whether it’s material goods, services, kids’ purchases or “stuff” for other loved-ones, etc,. our capitalistic society is just about irresistible when it comes to consumerism.