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Why B of A really killed the debit card fee

At least 650,000 people have joined credit unions since Bank of America announced its $5 monthly debit card fee, not including last-minute adherents of Bank Transfer Day.

By MSN Money Partner Nov 7, 2011 11:49AM

This post comes from Seth Fiegerman at partner site The Street.

 

The Street on MSN MoneyWhen Bank of America announced last week it would nix its proposed $5 monthly debit card fee, the official explanation given was that the company was responding to the "concerns" of its customers, but that may be putting it too lightly.

 

In reality, it may be due more to the bank's concerns that it wouldn't have nearly as many customers if the fee went into effect.


Post continues below.

At least 650,000 consumers have joined credit unions since Sept. 29, when Bank of America announced it would introduce a debit card fee in the coming months, according to a report released Thursday by the Credit Union National Association, which is based on surveys of 5,000 credit unions nationwide.

 

While the survey doesn't show which companies the new credit union customers banked with before, the survey did find that four in every five credit unions that experienced a surge in members attributed it to the blowback from fees being considered by big banks such as Bank of America.

 

At the same time, it's worth noting that this survey doesn't factor in the number of consumers making a last-minute switch as part of Bank Transfer Day, the massive social media-driven movement that was urging consumers to close their accounts with the big banks before Saturday.

 

While the full effect of Bank Transfer Day won't be known for days or even weeks, media reports from across the country showed thousands were out over the weekend to make their point to the big banks. Even The Wall Street Journal, which snarked that "people who gravitate to credit unions tend to be unprofitable for giant banks because of the small balances they keep on deposit," acknowledged the numbers involved -- anecdotally:

"On Saturday, the Boeing Employees' Credit Union in Seattle signed up a one-day record 659 new members. At the grand opening of a Randolph-Brooks Federal Credit Union branch in Pflugerville, Texas, the parking lot was so full that customers had to leave their cars across the street."

The Journal's headline? "Credit unions poach clients."

 

After years of being able to increase fees with little fear that customers would jump ship, the big banks finally had a reason to cave to consumer demands, perhaps most of all for Bank of America.

 

One survey released last week before Bank of America killed off its debit card fee found that only 40% of the bank's customers planned to keep it as their primary bank going forward. The survey also found that just over a quarter of Bank of America's customers were satisfied with the bank overall. The findings were the lowest by far of any major bank.

 

Given this reality, going through with the $5 fee could easily have been the final straw for many customers.

 

More on The Street and MSN Money:

87Comments
Nov 7, 2011 7:46PM
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To all of you who have not yet experienced the uncomfortable shaft by BOA: Hold still, your next after we're gone. The 29.99% CC interest rate hike imposed on me had nothing to do with any derogatory action on my part but solely BOA squeezing blood from the turnips that still had resources. In case you don't know, BOA dropped the $5 monthly fee in favor of a $25 monthly fee for those customers with less than $5k in their account(s) month to month. My elderly father received his notice by mail a week ago. So hold still, grab your ankles cause you who are left are next. As a matter of fact, I'll hold their cloak during the process.

Nov 7, 2011 7:44PM
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B of A almost did a "Netflix",  but then came to it's senses. 
Some damage was done to their already bloodthirsty reputation,  though.

Nov 7, 2011 7:44PM
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Ageconomist says that Interest Rates are based on credit scores and payment history.

 

Hmm.  Bank of UNAMerica approved my home loan with my wife, with our measly credit scores of 690 and 720.    Yet, 6 months prior, they jacked up our credit card interest to 29.99% because of "new regulations." 

 

First National Bank, after 5 years of FLAWLESS credit history with them, jacked my rate from 6.99 fixed to 19.99% variable.  Somehow, my FLAWLESS credit history was a huge risk.

 

American Express jacked up my Business Card from 7.99 fixed to 13.29% variable.  10 years and I think ONCE in 10 years, I had one payment that was two days late.

 

Yup, it is ALL about credit scores and payment history.  Those worthless peons who can't manage their finances are the ones to blame.  Lets all vote republican and take away their entitlements, so that they will have even LESS to survive on and give it all to the top 1% so they can create jobs overseas.

 

Sheesh, stop watching Republicon news for a change.   It is CORPORATE GREED why they jack up the rates.  It is CORPORATE GREED that causes Bank of UnAmerica to pay out 4.4 BILLION DOLLARS in bonuses to their FAT-LADEN GREED FILLED PIGS while laying off 30,000 employees.

 

Incidentally, I left Bank of UNAmerica (everything except my home loan). I stopped using my American Express and First National got the message when I Stopped using my card for almost a year.  Suddenly, my rate went BACK down to 7.99%.    Didn't matter.  They jacked my life up, I won't use them anymore.

Nov 7, 2011 7:22PM
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If taking your money out of BoA is fun, consider taking your 401k out of Wall Street.

You'll be happy, but think of the joy you'll spread in Goldman Sachs.

Nov 7, 2011 7:15PM
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Support the FINANCIAL Transaction Tax!  Call, email, twitter, put it on face book, Contact your Senators today!
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I have not set foot into a bank for personal business for well over 15 years. No real need today. Most of all of my transactions are done electronically and some are just done at an ATM. Going to a Credit Union only made sense for many reasons.
Nov 7, 2011 7:09PM
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Reb34 so let me get this straight you are not even commenting on this article?
Nov 7, 2011 7:07PM
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Back in college I was with BoA for less than a year before dropping them like a hot turd and switching to a credit union.   Didn't take long to realize out whose interests Boa really looked after, but then again, as a finance major, I was smarter than most.
Nov 7, 2011 7:03PM
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I am supposedly an unprofitable client, since I continuously search for the lowest financial impact to store and borrow money.  Yet, when BofA kicked me to the curb (they changed their minds 3X on the loan-to-value of my mortgage refinance) I took my mortgage and all other accounts to US Bank - one of the larger regional banks that didn't need a bailout 3 years ago.  So, since mortgage holders pay 3X their original loan amount over 30 years, BofA closed off a significant profit.  Poor decisions have ruled the organization since they merged with Countrywide & now they surely rue that move!

 

Nov 7, 2011 7:01PM
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We live in a free country with a free market system, right now at least,   everyone can choose who they want to bank with, so the choice is yours.  Interest Rates are assessed on people based on their credit scores which is based on past payment history. .  I use B of A and I pay no fees,  get free checking, free ATM use, free debit card,  ect.  You can't blame corporate banking because you have to pay high interest rates.  At some point you have to realize your financial solvency,  you have to take some personal responsibility.  Choose the best bank for you, but pony up and take some responsibility for the decisions you make,  Don't borrow money just because some bank tells you, that you are approved for a certain amount.  Make sound decision based on what you can afford, not what some bank tells you.  
Nov 7, 2011 6:52PM
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Only problem with putting your money in a community bank is, B of A is buying the smaller banks out.

Everyone should stop using corporate banks and corporate businesses. You want America back? Take out the corporate giants. That's who's responsible for the election turnouts. Your vote don't mean crap.
Nov 7, 2011 6:51PM
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Reb34 the fee was not associated with any deliquincy in the account, it was a debit card monthly fee to get your own money from your account.

 

Make sure you are informed before making a comment.

 

 

Nov 7, 2011 6:50PM
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The Wall Street Journal - like about everything on Wall Street theses days keeping yourself whole is far more important than anything like the truth, the facts, transparency in business or customer service. I would expect them to spin the story exactly as they did, gotta keep the advertisers happy.
Nov 7, 2011 6:48PM
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It seems as if B of A has forgotten their roots.
The Bank of America was formed in the latter part of the 1920s as the result of a merger between the Bank of Italy (based in San Francisco) and the Bank of America, whose business interests were solely based at that time in Los Angeles. The merger resulted in a rebranding of the expanded Bank of America company leading to the merged bank being called BankAmerica. BankAmerica was headed by Amadeo Giannini (founder of the Bank of Italy) and co-chaired by E. Monette (founder of the Bank of America).
The Bank of italy was established to serve working class citizens of the area, especially Italians living in San Francisco’s North Beach neighborhood. The bank survived the  san Fransisco earthquake of 1906 and was one of the first to offer loans to businesses to help rebuild the city.
Nov 7, 2011 6:43PM
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I was a Chase bank customer 6 years ago Checking, Savings, 2 Credit cards and my mortgage. we make under 100,000 pr year so our accounts were not large. but we used Chase for everything.
Then they raised my rates to 30% on my credit cards, I called customer support and asked why they raised my rates even though we had never been late on any payments ever? the response I received took me by surprise it was the amount of credit and length of credit history I was told, I had been a Bank One customer for 5 years they were picked up by Chase and had been a chase customer for 8 years (Was only a Chase customer 1 year when they gave us the loan on the house, credit cards and mortgage were given to us by CHASE) if it was good for them then why not now?
I asked them to lower my rate back to at least  10.99 (started at 8.99) They refused, so I told them I would move all my accounts! They told me to go ahead so  6 months later had a new mortgage, paid off both cards and moved both savings and checking to a credit union and never looked back.
The only thing I don’t understand is why it took so long to WAKE UP!   SO WAKE UP AMERICA!!!! Take your money back.
They also told me the 30% rate was to help us manage our credit better. Really can any one tell me If charging you 30% helped you?  They also asked me if the 30% was causing me a hardship I said yes, so the transferred me to the hardship department where I was told I needed to miss 3 payments before they could close my account and lower my interest rate. under the hardship rule.
Nov 7, 2011 6:27PM
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I bet b of a was counting on the other banks to follow suit, that way bank customer's would not have any place to move their accounts to.    

In fact, the card fee was being considered by other banks as well.  But clearly they backed down, leaving bofa hi and dry on this.   So bofa really didn't have any choice but to back down, like the other banks / team / co-conspirators.
Nov 7, 2011 6:24PM
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BofA has always been the most expensive bank to deal with. Now that Wells Fargo is into the bigtime banking it is my opinion that if you want to SAVE money go with a small community bank or a Credit Union.

The Big Boys don't get fat eating crumbs. If you have to watch your money closely the Big Banks will have to learn from the discount brokers. People are interested in saving money. Big Banks Do Not deliver.

One other thing---If you are looking for intelligent life, look to the Bankers LAST. These guys are as worthless as Teets on a Boar Hog!

Nov 7, 2011 6:19PM
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this whole got out of control: situation should be a mistake we can learn from and more on in the right way mistake were happening banks lend wrong and people excepted the loan. but bank arn't the only business that was misleading. we have to get more realalistic, actually we should our american ways start things that are new. what we try and achivce from this we should only

be truthful about. for only God came to do good that should only what we should do.

Nov 7, 2011 6:16PM
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Do not allow Big business to manipulate your life or bank account................... This so called softening or reconsidering is not enough.. It is not their money to begin with! See the Problem Is As They See it,, that they are not Profiting by enough Billions.... So this is why they initially chose to add these fees..... Do not go along with them their fee will come back as soon as they see things settling down...................  Go ahead and transfer your accounts to your local credit union, in you area which will not charge you the fees... its the only way the banking industry will understand and make the no charge changes permanent......................
Nov 7, 2011 6:09PM
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Always been B of A customer, always will.  No reason for me to switch.  I have no fees because I know how to manage my money and keep minimum balances, never bounce a check, etc. 

 

I'm sorry to those of you that have fees, but you're obviously violating some term of the contract you signed up for because I have never had a fee (had one, but they removed it with a simple phone call). 

 

At least by you switching you realize that you need to manage your money more diligently.  You can at least thank B of A for that. 

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