Populist anger pushed Bank of America to abandon its proposed $5 debit-card fee last year. But for some customers, experts say new fees the bank plans to introduce in its place may be even worse.
America’s second-largest bank may roll out higher monthly charges on customers who fail to maintain a certain balance, buy other products, or bank strictly online, the Wall Street Journal reports. Accounts currently being tested in Arizona, Georgia and Massachusetts carry monthly fees ranging from $6 to $25 a month — well over the debit-card fee. (Bank of America and the American Bankers Association did not respond to requests for comment.)
These higher monthly checking fees would be charged to customers who can least afford the higher rates, experts say. But the bank will spare its most valuable customers, says Odysseas Papadimitriou, chief executive of CardHub.com. “If they execute this correctly they will only alienate their most unprofitable customers,” he says.
As a result, this could be even worse than the debit card fee debacle, some contend. With the earlier $5 fee, customers could still choose to abandon their debit cards, but giving up a checking account really isn’t an option. Ironically, free checking accounts had been subsidized in part by the transaction fees charged to merchants each time a debit card was used, says Ben Woolsey, spokesman for CreditCards.com. Now that those transaction fees have been reduced, the subsidy is going in reverse: customer checking fees are being used to cover the cost of debit cards, he says.
The debit-card fee, along with the Occupy Wall Street movement, inspired thousands of customers to abandon big banks for credit unions. Though switching banks can be arduous, customers have less and less patience for requirements to buy certain products or maintain certain balances, especially if they can’t afford it, says Woolsey. Nearly one-in-three adults said they would leave their bank if it introduced similar fees or any other overnight charges, according to a survey by consulting firm The Research Intelligence Group.“Consumers now understand that they have choices and can vote with their feet,” says Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group.