BOA ADDS DEBIT FEE ADDING ANOTHER REASON TO BANK WITH LOCAL BANK OR CREDIT UNION

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EDITOR’S NOTE: yet another reason for banking elsewhere. The backbone of the payment processing and ATM transactions is the same for all banks and there are plenty of alternatives to the convenience that big banks seem to offer. Next week, when American Homeowners Cooperative (see under construction, but hopefully live Monday October 3 www.americanhomeownerscoop.com) opens its doors it will be well on its way to providing an initial abse of more than 5,000 locations nationally for people to use their ATM card and to use a debit card without these ridiculous charges.We are going to the next stage of fighting these banks — in the marketplace where the consumer is king.

Bank of America to add $5 monthly debit card fee as era of low-cost banking ebbs

By , Published: September 29

Bank of America will become the first major bank to charge customers across the country a monthly fee to shop with their debit cards, part of a wave of changes that are eroding the low-cost model of banking that consumers have long enjoyed.

The $5 fee will debut next year for the bank’s basic checking accounts. It will apply only to debit card purchases and not to ATM withdrawals, online bill pay or mobile phone transfers. A spokeswoman said the bank is “adjusting our pricing to reflect today’s economics.”

The move is just one of the ways banks are overhauling consumers’ accounts in the wake of the financial crisis, which resulted in a regulatory overhaul for the banking system and a fundamental shift in the industry business model. Rather than charge the riskiest consumers the heftiest fees, banks are now spreading their costs more evenly among their customers.

For some banks, that has meant eliminating free checking or ending rewards programs. Credit card holders have found their spending limits slashed and their interest rates increased. And with a new rule taking effect Saturday that limits banks’ ability to make money from merchants, it also means paying for the privilege of swiping your debit card.

“I think we are going to see a little bit of a shift in behavior. We just don’t know how dramatic it’s going to be yet,” said Patricia Hewitt, director of debit advisory services for the consulting firm Mercator.

The move by Bank of America, the nation’s second-largest bank by number of locations, could clear the way for other banks to institute similar charges. Wells Fargo, the country’s biggest bank, will begin testing a $3 monthly transaction fee in five states starting Oct. 14. Chase piloted a $5 fee in February for some customers in Wisconsin but has not expanded the program.

Banks argue that the fees are among the unintended consequences of the wide-ranging financial overhaul passed by Congress last year. One provision, sponsored by Sen. Richard J. Durbin (D-Ill.), directed the Federal Reserve to set new guidelines for the fees that banks charge merchants each time a debit card is swiped.

The debate over these swipe fees, also known as interchange, became the center of an intense and expensive lobbying battle this summer as banks attempted to roll back the legislation. After that effort failed, the Fed issued rules that capped the fees at 24 cents for an average debit card transaction of $38 — roughly half of what the industry had been collecting. The new cap takes effect Saturday and is expected to cost banks billions of dollars.

“I’m actually surprised it took Bank of America this long,” said Richard Hunt, president of the Consumer Bankers Association, a trade group. “This was going to happen when Congress got involved in price fixing.”

In a statement Thursday, Durbin said the new rule would benefit small businesses, which have long complained that the swipe fees were onerous. He blasted Bank of America’s new fee as “overt” and “unfair.”

“Bank of America is trying to find new ways to pad their profits by sticking it to their customers,” he said.

Lawmakers and regulators have ridden a wave of populist unrest in recent years to institute several significant changes to consumers’ checking and credit card accounts — moves that the industry says has eaten into profits and forced banks to raise prices. Last year, the Fed prohibited banks from charging consumers overdraft fees unless they opted into the service. Before that, Congress overhauled the way lenders assess fees and interest rates on credit cards.

“Every time Congress takes a step to protect consumers, the banks use it as an excuse to raise fees,” said Mallory Duncan, general counsel for the National Retail Federation, a trade group. “That doesn’t mean Congress shouldn’t pass consumer protection laws.”

Hewitt said it is too early to tell how Bank of America’s new debit card fee will change consumer behavior. Roughly one quarter of debit card purchases are less than $10, a sign that many consumers use their cards as a replacement for cash. On average, American swipe their debit cards 16 times a month, she said.

“It’s going to take a while for this to play out,” she said. “It certainly could motivate some consumers either away from debit or to other payment forms.”

Consumers Union, an advocacy group, encouraged Americans to scrutinize their bank statements and complain about fees they do not like. The group also published several tips on Thursday for consumers seeking to switch banks as a result.

“There are a lot of banks and credit unions that will be eager to attract new customers unhappy with all the new fees that some big banks are starting to charge,” said Norma Garcia, manager of the group’s financial services program.

12 Responses

  1. […] Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND Livinglies’s Weblog […]

  2. Pass this along, maybe if enough people complain, they may rethink fee.

  3. ha ha, cubed—I’d like to stick it somewhere on Jamie Dimon…

  4. We had a BoA bank account for 20+ years and we had a good standing with them. We closed out account with them in May of 2009. Early in 2008 things changed when $100 was deducted from our checking account. No explanation was made. When I inquired about it they could not tell me why the money was deducted. After many months of crappy customer service and being told they could not help me, we closed the account. They never refunded the money. But that is OK because we had a $2,000 credit card debt with them that was discharged in BK.

    My sons still have accounts with them and they used their debt cards all the time. I don’t even think they use any checks. They are going to close their BoA accounts tomorrow.

  5. Look at their stock

    http://quotes.wsj.com/BAC

    Even Warren Buffet can’t save them. Warren Buffet should be ashamed of himself for backing BAC.

  6. bout time Carie.

    Now take your chase card and put 5 minute epoxy on it and stick back in to a chase atm. hahahaha.

    Don’t do that, your name is on the card.

  7. ie. pot, meth, or heroin…

  8. leapfrog—I like your last sentence…kind of like how I feel about anybody using drugs is supporting the be-headings of innocent people in Mexico…

  9. I had Wells Fraudgo for 25 years and finally got out of there. Don’t know what took me so long, but I have not had any nickle-and-diming games or account manipulations since I kicked them to the curb. I must have been a glutton for punishment to stay with them. I must have enjoyed the abuse.

    I now have a healthy, solvent community bank. I have had zero problems in the almost 2 years I’ve been there. The fees are lower if you incur any (which I have NOT, thanks to them not playing games with my account).

    Its a choice and my choice is to no longer suport drug money laundering that the TBTFs have engaged in. I’m no longer supporting corporate welfare to insolvent zombies. I’m no longer supporting fraudclosuregate scandals engaged in by the TBTFs. Unlike the TBTFs, my local community bank doesn’t participate in the securitization casino games and as a result, they had ZERO foreclosures last year. I’m no longer supporting obscene bonuses to scumbag CEOs who have run their companies off cliffs and then whine for the taxpayers to bail them out.

    It feels GREAT to no longer support corrupt Too Big To Fail. If you are a customer, you are supporting what they stand for. Move your money out!

  10. “We reward people for making money off money, and moving money around and dividing up mortgages a thousand times over, selling it to China…and it becomes this shell game.”
    Of the current state of the America: “None of the major religions, in fact they all, say it’s one of the worst sins you could commit, is to take such a large piece of the pie while others suffer.” And of the Wall Street protests: “It’s starting. It’s down there right now on Wall Street. It starts with the young people…it’s going to spread across the country.”

    http://piersmorgan.blogs.cnn.com/2011/09/26/michael-moore-of-wall-street-protests-its-going-to-spread-across-the-country/?hpt=pm_t1

  11. I finally dumped Chase and went to a credit union…it felt really good.

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