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Buh-bye, Bank of America?

Bank of America is willing to alienate customers over a new $5 monthly fee.

By MSN Money Partner Sep 30, 2011 4:16PM

This post comes from Jon Gorey at partner site The Street.

 

The Street on MSN MoneyBank of America said Thursday it will begin charging customers $5 a month to use debit cards. Much like Netflix's recent gaffe of hiking prices for a service people have come to expect -- without actually adding any value to the service -- Bank of America appears ready to throw away loyal customers over a paltry $60 a year.

 

The bank insists the move is necessary to make up for lost revenue as a result of new regulations. The Durbin amendment in the Dodd-Frank Act caps the amount of money banks can charge merchants for debit card transactions.

 

As you probably know, when you use a credit card or debit card to pay for a dinner out on the town, a new TV or a cup of coffee, the issuing bank keeps a small share of the transaction -- not unlike Ticketmaster's "convenience fee," but far less egregious. That's why credit card companies offer reward points: They're skimming 2% to 3% of every sale, so those kickbacks are really coming to you courtesy of your local restaurant, Best Buy or Dunkin' Donuts.

 

Because of the new regulations, banks are now limited to charging merchants a maximum of 21 cents per transaction, plus 0.05% of the sale, on debit cards.

 

This helps retailers small and large -- witness furniture superstore Ikea, which now offers some customers a 1% store credit when they use a debit card instead of a credit card -- but obviously cuts into a revenue stream that banks had grown accustomed to. And Bank of America isn't the only bank taking this step: Wells Fargo and JPMorgan Chase are experimenting with the idea as well.

 

Still, really? I've been a more-or-less satisfied Bank of America customer for years -- which I figure is as good as you can hope for when dealing with a massive financial institution -- and because of its "Keep the Change" program, I've been conditioned to use my debit card to pay for just about everything: coffee, lunch, gas, clothes, groceries -- you name it.

 

Wall Street has worked hard to persuade us to use debit cards instead of cash. In a series of Visa ads, out-of-it customers who pay with cash throw a monkey wrench into the well-oiled cogs of commerce.

 

Now they're telling us we're a drain on their finances? Because of a habit they helped create?

 

I've jumped through Bank of America's direct-deposit and minimum-balance hoops, and I even keep a decent chunk of savings languishing in my account to avoid their fees, even though it's earning next to nothing in interest.

 

Between my rampant debit card use and the nearly interest-free loans they're able to make with my money, they've been banking on me for several years.

 

And, now, they're willing to throw all that away over an extra $5 a month? Because, let's face it: If they start reaping a $5 fee from me for something I can do elsewhere for free, I'm gone. Done. I've left plenty of banks over smaller transgressions. There are local banks, and online-only options like ING Direct, that will happily accept my reliable 21 cents or more a day as I swipe my way across town. (Thank you, competitive free market.)

 

The only other explanation I can think of is that Bank of America is trying to spark enough public backlash that lawmakers are forced to change the bill. It seems unlikely, but if BofA is bluffing, I'd consider sticking with them.

 

But if not? Count me out.

 

More on The Street and MSN Money:

40Comments
Sep 30, 2011 6:35PM
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Now they're telling us we're a drain on their finances? Because of a habit they helped create?

 

We are a drain on their finances?  And the 4.4 BILLION dollars those FAT ARROGANT PIGS paid out to the top 10,000 employees in BONUSES in the YEAR 2010 (yes, 1 year) that averaged out to $440,000 per employee WASN'T A DRAIN ON THEIR FINANCES?

 

That is what we bailed them out for.  So the ARROGANCE and GREED of their actions could CONTINUE.  They TAKE homes from people who are NOT behind, take money that was given with the intent to lend out to Small Business and write THEMSELVES bonus checks.

 

This is why I LEFT Bank of UNAmerica and hope MILLIONS more do so. 

Sep 30, 2011 9:55PM
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Didn't BoA just fire a good number of employees?

May be they should fire some execs with hefty salaries.

We all need to start using cash again...period. It's stupid

to continue paying these instituions money for using your

own money.

Oct 2, 2011 7:51AM
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I don't care if I have a million or a hundred dollars in the bank.  I am tired of the gouging.  We bail them out and they hold on to their money and screw everyone.  I am going to put all of my money at the credit union we belong to.  They do not gouge (at least not yet).  Take the $5 and multiply it times a milliion customers.  Hmmmmmmmmmmm.  At least the credit unions are here in the good ole United States.

I say Bye Bye to ANY bank.

Sep 30, 2011 10:42PM
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If everyone just went cash, it would bring these greedy banks to their knees.Surprised
Oct 1, 2011 10:15AM
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It isn't the fault of consumers that banks needed taxpayer welfare to bail them out of their own bad decisions.

 

And what is this great service BofA supposedly performs?  My checks are direct deposit and most bills are paid online.  I use the debit card for local purchases and the retailer pays a fee on each transaction.  So BofA want five bucks a month from me because they can't charge the retailer whatever they want on each transaction??? 

 

I'd rather tip my dog groomer five bucks a month for a the great service she gives, but BofA????  No way!

Oct 1, 2011 3:56PM
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Bank of America and greedy banks have reached a dangerous level with so much speculation,

uncertainties, and manipulation. These banks are too big and virtually control our lives.

Americans are facing difficult times and these banks sucking our every last blood drops.

Time to netflix BAC and greedy banks. No Bailout. No More Hundred Million in Bonus. No Bank of America.

Oct 1, 2011 12:07PM
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Please start using your local credit union.   I am flabbergasted that in this day and age any American with an education would use anything but a credit union.  Why should we support people who don't like us and don't want to hire us at places like Bank of America, Wells Fargo, etc.?  You won't be ripped off at your credit union.  There are no president's of a credit union stealing 50 million dollar salaries from the customers or the taxpayers. 

 

If you have ever been in the military or a family member of a military person there is a good chance you can open an account with Navy Federal Credit Union.  That is just one example.  There are many, many local credit unions you can join.  Just look for them with Google or Bing.

Sep 30, 2011 6:41PM
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Just  a  simple  comment...been  banking  with  them  since  1990.  Come  Jan  1st,  no  more.
Oct 1, 2011 3:41PM
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This just really makes me sick! What if we just cashed our checks, and paid greenback cash for petes sakes! or even go back to writing checks and mailing them thus perhaps saving the post office service as well. $60 bucks a year to use a debit card (which is cash anyway) is redic!  I say pay cash , and or buy a stamp and mail a ck! cost effective as well. Bank of America got us into the mess of home forclosure problems and now want anyone with a debit card to pull their arses out of their mess if you get my drift.

 

Sep 30, 2011 11:11PM
Oct 1, 2011 9:16AM
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BOA is unbelievable, I have never like the bank and never will, in these hardest of times when people are not actually making ends meet , they have to throw a little more out there for people to worry about. Well I hope the SOB go bankrupt and  have to close their doors. We have too many good banks out there for their foolishness.
Sep 30, 2011 9:56PM
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And people continue to use this bank because???
Oct 1, 2011 4:00PM
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Time to netflix greedy Bank of America.
Oct 1, 2011 12:04PM
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Is BofA under cyber attack? Their online site has been down since the announcement.
Oct 2, 2011 2:10AM
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chase banks is crook ditch them as well
Oct 1, 2011 6:50AM
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And now unemployment is paid using a debit card..............and guess which bank is handling all of it???????????HO HO HO pretty unbelievable!!

Oct 2, 2011 12:01PM
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Ever since BofA allowed me to open an account 20 years ago and then my account was empty.. I have nothing good to say about this bank... somehow another person had the same account number as me from a different city and he took the 2k from my account and BofA *****(^^ didn't reimburse me, court wouldn't hear case, unreal..

 

So no surprise to me they get bailout money to stay afloat(which was disgusting in the 1st place), so much for free enterprise and competition.. If there's really no competition, then you can always add fees, why would they care.. they got bailout money and have no fear of being shut down like they should be... More banks will follow since BofA will get away with it... so credit union up NOW..  Why should you pay fees to put YOUR OWN money in the bank and use your own money via debit transactions???? Gotta luv the we don't accept bills over $20 at certain locations in the evening times(banks no this exist).

 

There's almost no reason to complain, at least we have a choice to bank with another bank or credit union..

If you don't like the fee, then move to a more customer friendly bank, if there is such a thing... I only have my money at Credit Unions. Free checking, no monthly fees, and now no debit card fees.. ROFLMAO at banks...

Sep 30, 2011 6:13PM
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this is stupid, i hope chase doesn't do this.
Oct 1, 2011 10:37AM
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The lack of liquidity was a major factor in the 2008 financial crisis. Most banks or mortgage lenders relied too much on the idea of insurance to offset the systemic risk. The reason lenders did so many housing loans was they believed if the small percent who would default, they would still have AIG backing them. Problem: that small percentage who defaulted on average (3%) turned into 12- 15% in less than a year. That's a huge increase. The other major problem was AIG. They simply did not have the liquidity to pay back these banks, and they had some other internal accounting problems as well. As we all know, the gov. had to step in and back AIG and two or three major banks, otherwise, it would have all collapsed. This would have snowballed across the globe and it would have been a horrible scenario.  As for Bank of American, I think they have the right to do whatever they wish, but it really falls back on the consumer: you don't have to bank with them or use a debit card. In fact, I don't even own a debit card anymore (bank with KEY). I use cash and keep a regular credit card with a small limit of only $500, so I can easily pay off every month. Best advice ever given to me: learn to live on half your income, save the other half. Easier said than done, I know.
Oct 3, 2011 10:54AM
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Screw Bank Of America. My wife is happy after she switched to my bank 5 years ago. I have  been a customer of USAA more than 15 years, and USAA is best and trusted bank in America. If you are in military: Navy, Army, Air Force and others, I suggest you to switch to USAA. 
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