It appears the nation’s largest banks are changing their mind on the imposition of fees on consumer debit card usage. After the recent outcry from debit card consumers across the country Chase Bank, US Bank, PNC Bank, and Key Bank have all just issued press releases stating they WILL NOT impose fees on their checking account customers’ debit card usage.
A huge trend had previously been settling in after news that Bank of America, CitiBank and Wells Fargo (among others) had all begun testing the imposition of small fee(s), typically $3 to $5 per month, for those using their debit card for purchases and not meeting certain account requirements (ie minimum balances, etc).
This almost immediately lead to vocal outrage by consumers with an explosion of tweets, disgusted facebook threads, and the like raging against these new rules.
Here at BankVibe.com, we had already discussed the terrible timing in which these new fees came about. In general consumers have had an unfavorable opinion of the nation’s largest banks – which undoubtedly originated from the bank bailouts of 2008 and has only worsened with a growing number of fees and penalties imposed on low revenue generating customers (ie those with low balances and very few accounts).
The industry-wide response has been an influx in credit union and community bank deposits and a loss of accounts from the nation’s largest banks. Throughout the course of the last few years we’ve seen consumers pouring out of big banks to opt for accounts with smaller, locally based institutions (mainly credit unions or online banks like this one) who don’t impose fees and, in the case of credit unions, who don’t have profit-hungry shareholders to report to.
Glad to see things have reversed for the time being. We’ll see if it sticks.
Chronological Run-Down of Debit Card Fee Imposition:
- 2010 provision to Dodd-Frank financial-overhaul law reduces amount banks can charge merchants for debit card usage by nearly 50%.
- Industry analysts suggest that banks will lose $6 billion due to new amendment.
- Banks test new ways to make up for losses (mainly by imposing debit card fees to low revenue clients)
- Bank of America goes public with decision to impose $5 monthly fee. Chase Bank follows by testing $3 monthly fees in February.
- Immediate outcry from public through social media as well as disdain from main stream media and politicians (most notably President Obama).
- Small credit unions begin raking in new customers at unprecedented rates. BethPage Federal Credit Union of New York reports adding 1,500 new customers the week following Bank of America’s initial announcement of debit card fees.
- Banks pullback swiftly with many large institutions pledging to impose ZERO fees for debit card usage to differentiate themselves from the likes of Bank of America and Wells Fargo.