Bank of America announced today they will abandon plans to charge a $5 monthly fee for debit card use. This comes on the heels of a similar announcement from other big banks including Wells Fargo, Chase, SunTrust, and others. Why are they backing off? Because you said no.
Why all the fuss?
Last month the Fed (Federal Reserve) – mandated via the Dodd-Frank Act – capped fees on debit card purchases to about half the previous level. This change caused many big banks to scramble for an answer to the nearly $8 billion loss in annual revenue for big banks (data per Bloomberg Government).
Their answer? Pass the loss down to the consumer in the way of monthly debit card fees.
Your response? No way! And it worked.
Now card issuers must seek other ways to replace revenue and trim costs.
How will they make up the lost revenue?
Great question… I dare you to guess.
If you lose a job and have less revenue, what do you do? There are two possible solutions: 1) earn more revenue, 2) cut costs. If big banks find different ways to pass costs down to you they better do it in a way you won’t notice – since you already rejected their last attempt and you’re on guard – OR, they’ll have to cut costs.
They could cut costs by eliminating branch offices in favor of an increased focus on online banking (like that of Capital One 360, Ally Bank, PerkStreet, or USAA). Things are moving in that direction anyway, and big banks refusing change risk a dinosaur’s fate.
They’ll most likely opt instead for a revenue stream you’re less likely to notice… which brings me to my last question.
Will you switch anyway?
Sure, the big banks did their best Mitt Romney and flip-flopped their way out of debit fee wrath… but did they lose your confidence in the process? They never had mine.
November 5th is still Bank Transfer Day – a national movement to switch from big banks to online and/or local banks and credit unions. Remember, remember the 5th of November!
I made a few recommendations, based on my experience and research, that you can take or leave. Whatever you do, just make sure you’re not staying with a bank you hate because you’re too lazy to make the switch.
Betterment is one of my two favorite ways to earn interest on my savings! They have an awesome program for the Average Joe to save and invest simply and effectively. There are no minimum balance requirements and no transaction fees. Read my Betterment Review or open an account to get started earning now.