Bank customers win one -- for now
Now that Bank of America and other big banks have backed away from plans to charge monthly debit card fees, customers can celebrate -- and prepare for the next round.
Champions of the underdog -- and mad-as-hell bank customers -- celebrated when Bank of America announced Tuesday that it would not implement a monthly $5 debit card fee after all.
Consumers had voiced their outrage by the hundreds of thousands, signing a petition against the bank and joining a "Bank Transfer Day" movement to encourage big-bank customers to move their accounts to credit unions and community banks. An online petition drive by 22-year-old Molly Katchpole of Washington, D.C., had 100,000 signatures within a week, and 300,000 after a month, ABC News said.
Is there a trend here? Netflix recently reversed itself after customers loudly opposed its plan to split the streaming and DVD rental operations, not long after an unpopular price increase.
The power of many
Consumers are gaining power, thanks in part to social media like Twitter and Facebook. Through social media, individuals can rapidly build support for causes. The result can be a public relations nightmare for long-established companies accustomed to business as usual.
"Most corporations only become aware of the wallop of this emerging consumer power when they make a serious mistake and fall victim to it," USA Today said. Post continues below.
"The public backlash over debit card fees should serve as a big wake-up call to banks that they can't take their customers for granted," Pamela Banks, senior policy counsel for Consumers Union, said in a statement. "While banks may come back with other fees in the future, they'll be gauging public reaction carefully."
More fees likely
Many industry watchers say banks will implement other fees to make up for lost income due to the Durbin Amendment, which caps the "swipe fee" retailers pay banks every time a customer uses a debit card to make a purchase. As MSN Money reported last month:
Starting Oct. 1, the maximum fee merchants will pay is 24 cents per debit transaction. Prior to the change, the current average was 44 cents, based on the $38 average debit purchase.
"When banks have their revenue streams cut in one area, they will find a way to make up for that in another area, and it is always the consumer who pays for it," Bill Hardekopf, chief executive of LowCards.com, told MarketWatch.
In fact, the banks had already found a way to make up for the reduction in debit card income -- by upping monthly checking account fees, Odysseas Papadimitriou, CEO of credit card comparison website Card Hub, told MainStreet.
"Debit card fees weren't just about making up for lost revenue, but also an opportunity to boost their bottom line," he said.
Because the banks have already covered the swipe fee losses, he said, new fees might not come immediately. "Banks are entering a holding pattern. We may see some tests, but no major decisions (on new fees) will be made for at least six months."
What to watch for
Check your bank account to see what you are being charged and whether any fees have changed. Is your bank now requiring a higher minimum balance to avoid paying fees?
If you decide to switch banks, consider MainStreet's "how to quit your bank" advice, which includes: "(Look) at your own spending behavior and determine whether you'll be able to duck the fees at the new bank you're thinking of joining."
"Stay vigilant," Consumers Union warns, and offers tips on changing banks -- and a how-to video -- on the website www.DefendYourDollars.org
More on MSN Money:
While it's on a roll... do you think everyone could start yelling about these "contracts" that we're tied into for phones, cable, etc.??? I shouldn't have to commit to a company that gives me poor customer service, charges me fees out the rear (and doesn't explain what it's for), and/or stay with a company that misrepresents itself to get me to sign up and then does a 180 after I'm stuck with them for 24 months!
For a month... don't renew your phone contract (get a prepay), turn off the cable (or cut down the services to local channels), and continue moving money from the big banks to small local banks & credit unions. I don't know about everyone else, but I'm tired of companies treating me like they're doing me a favor by letting me use their services!
BTW... I worked in banking for over 20 years. Did you know that the "rich" have low interest loans, waved fees (of all types), and get free perks? Where do you think the banks are making a profit from?? An elderly woman called me in a panic. She lives on her one SS check each month and made a $20 error. Because the bank paid the largest amount first, it bounced several smaller amounts. Her overdraft charge was $195.00, leaving her $30 to live off of for the rest of the month. The manager refused to refund any money for her mistake. The local rich dude who was always in overdraft, but in "good standing" with the bank, had $2,356 in overdaft charges (5x that per month)... and they were refunded. Hearing that woman cry is what made me leave banking.
Banks aren't looking to make up for lost revenue. That is the lie being hard-sold to us by every "analyst" out there. No, its about MAINTAINING the current amount of revenue they creatively usurped from us over the past 3 decades. 1st it was convincing us to carry credit card balances. That is NOT a historical bank profit stream, as pre-Stagflation, no one had more than 1 or 2 open revolving credit accounts, and paid the balances each month. Now, even though the population has doubled or more, and credit accounts per household have also doubled or tripled, they still cry about losing revenue from revolving credit accounts!! They have something like 9X more open accounts than they had in the 1970s! And most are accruing interest!!
Next: reduced labor costs due to the ATM. Sure, branches have a skeleton crew on Saturdays now, but compared to the army of tellers needed M-F manning counters and drive-thru windows, the ATM helped them save tons in employee costs. Then came direct deposit, internet banking and electronic transfers. Then they got an entirely NEW revenue stream: Instead of paying money to print then process checks, they COLLECT profit from swipe fees! And now they whine because the profit has been regulated and reduced? Seems to me that Congress needs to regulate their @$$es back to 1960 and let them figure out how to make money the way their grandpappies did!
I laugh when I hear about how Bank of America will make the CUSTOMERS pay for the loss of revenue due to the new act.
They could *HALVE* the amount of BONUSES they paid to their top FAT PIGS at the money TROUGH in 2010 and have FULLY paid for the lost revenue. 4.4 BILLION DOLLARS in just BONUSES to those PORKERS in 2010 alone.
Obviously, you can see where the top 1% feel their money needs to go, and where they are going to get it from (the REST of us).
Yeah, Right..........BoA listening to their customer's voices. WHAT a CROCK!
More like they WITNESSED the FLOW of CASH OUT the SAFE as many customers set up new accounts elsewhere, mainly Credit Unions.
Poor BoA, Boo-Hoo. If they had treated customers as people, rather than exploit their resource, possibly people would not have bailed on them. IF BoA had properly used all of their BailOut $$$, they wouldn't be in financial trouble & attempt to charge people to access their own money, that BoA uses as leverage.
I, for one, say Good-Bye, Farewell, Adios, Adeiu. Started with a small bank decades ago, time after time bought out with BoA now owning. Hate the way they "HOLD" money for their use over weekends, until midnight Monday.
They are not the only guilty ones. Wells Fargo, Chase are the same.
They of the Big Banks need the Wind Knocked Out of Their Sails.
Want to really get them, keep minimum amount in account to keep open but, do not use the account.
might cut into the bonuses. Im dumping BOA and going to a credit union. Im disgusted with their greed.. they use MY money then charge me to use MY money?? Also I have found their customer service to be lacking.
Too bad the greedy bank execs cant take a little less in profit since the rest of us are...
People need to be more active, rather than just complaining. Shop around people. Check your local banks. They offer pretty much the same services and would love to have your money. If more fought back against the bigger banks, and pulled their money out, the banks will get the message.
It's good that the banks listened this time. But I wonder how many investers they lost during this. Not many I would guess.
I have no faith in the big banks. I keep my money local.
I cancelled my B of A account, it wasn't very much but I closed the savings and checking both.
I also gave up the debit card, not only did my local Credit Union issue me another card on the spot, they also pay a dab more interest on my savings.
The lady sure did try to talk me out of it but there was three others there doing exactly the same thing. I did have to buy new checks but all checking is free there anyway.
I see they cancelled that fee, but I still am not going back. Stick with the little banks and Creidt Unions, they are way better.
They won't be getting any more fees from me no matter how they hide them. I changed to a CU as soon as I got notification of the fees. Banks can be for profit all they want. I chose to go to a non profit CU and I get to keep my money and I even make a little back.
If it wasn't such a hassle to change banks I'm sure a lot more people would do it.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
If you're thinking about buying a car and the Carfax report comes back clean, you're good to go, right? Um, maybe not. Here are four other ways you can avoid buying a clunker.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'