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Debit Card Fees: Some Banks Say no

5:53 PM, Oct 28, 2011   |    comments
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NEW YORK -- Many big banks are lining up to assure customers they won't impose the debit card fees that have sparked a backlash against Bank of America.

According to a person familiar with the company's plans, JPMorgan Chase (JPM, Fortune 500), the country's biggest bank, has decided not to charge customers for debit card purchases. The decision follows a test of the fee the bank began in two states in February. That test will be dropped in November.

The Wall Street Journal first reported Chase's decision on Friday.

Chase joins several other major banks that have declared they have no plans to implement debit card purchase fees, including Citibank (C, Fortune 500), TD Bank (TD), PNC Bank (PNC, Fortune 500) and Key (KEY, Fortune 500).

"Our customers told us it would be a huge source of irritation for them," Citi spokeswoman Catherine Pulley said.

The message was also loud and clear at TD Bank, said Nandita Bakshi, head of products. "They actually told us that if we were to charge a fee that they would be discontinuing their accounts or services with us."

Bank of America (BAC, Fortune 500) announced its $5 monthly fee for some customers who make purchases with debit cards in late September. The charges do not apply to customers with certain premium accounts.

Bank of America is still dealing with consumer fallout.

Some on YouTube are posting Bank of America "breakup" videos, in which they threaten to dump the bank if it doesn't dump the fee.

And over 65,000 on Facebook have RSVP'd to Bank Transfer Day, in which participants vow to move "our funds from the major banking institutions to nonprofit credit unions" on or by Nov. 5. The event is the brainchild of a Bank of America customer in California.

There are signs the outcry has led BofA to scale back its plans. The bank may create new ways for customers to avoid the fee, according to a person familiar with the bank's plans.

Under proposals the bank is weighing, customers could avoid the charges by having their paychecks deposited directly with Bank of America, maintaining minimum balances or by using Bank of America credit cards.

The $5 fee was widely seen as a response to the Durbin Amendment to the 2010 Dodd-Frank financial reform bill. Enacted in July, the provision cuts back the fees banks can charge merchants for debit card purchases to 21 cents from 44 cents.

While blowback against Bank of America has been the loudest, the bank is not alone in charging fees for debit card purchases.

 

CNN

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