Bank of America Corp announced that it will not implement the $5 monthly fee for debit card use in 2012.
Not only was this a move that would cost them current clients, it would also cost them new clients. They were left alone when rivals backtracked on charging fees on debit cards. Other higher account fees remain.
JPMorgan Chase & Co and Wells Fargo & Co last week decided to not implement similar programs. SunTrust Banks Inc and Regions Financial Corp decided that they would end monthly charges and reimburse customers.
Banks explained that they needed to increase fees to maintain their earnings in view of the new regulations regarding the fees they charge retailers when consumers swipe their cards. The fees sparked a firestorm of criticism from consumers and politicians – even shareholders.
Bank of America began softening its stance last week suggesting that clients would have ways to avoid this fee. It appears that their goal was to direct clients to use their Bank of America credit card.
The reversal is another embarrassing about-face for Bank of American CEO Brian Moynihan since his request for a modest increase in dividend was denied by the Fed. Reserve Board.
Edi Alvarez, CFP®
BS, BEd, MS