Bank of America nixes $5 debit card fee

A cus­tomer at a Bank of Amer­ica ATM in Hialeah, Fla. Bank of Amer­ica Corp. is scrap­ping its plans to charge a $5 monthly debit card fee. The bank’s deci­sion to drop the fee came after a roar of cus­tomer out­rage in recent weeks over the fee. (Asso­ci­ated Press | Alan Diaz)

CANDICE CHOI

AP Per­sonal Finance Writer

NEW YORK — Bank of Amer­ica Corp. is scrap­ping its plan to charge a $5 monthly debit card fee.

The bank’s deci­sion to drop the fee came after a roar of cus­tomer out­rage in recent weeks over the fee. Other major banks, includ­ing JPMor­gan Chase & Co. and Wells Fargo & Co., already can­celed tests of sim­i­lar debit card fees last week.

Sun­Trust Banks and Regions Finan­cial Corp. fol­lowed suit on Monday.

Anne Pace, a spokes­woman for Bank of Amer­ica, declined to say whether the com­pany expe­ri­enced a spike in account clo­sures since announc­ing the $5 debit card fee in September.

But in a state­ment Tues­day, Bank of America’s co-Chief Oper­at­ing Offi­cer David Dar­nell said the deci­sion was based on cus­tomer feed­back. “Our cus­tomers’ voices are most impor­tant to us. As a result, we are not cur­rently charg­ing the fee and will not be mov­ing for­ward with any addi­tional plans to do so,” he said.

Pace added that a “chang­ing com­pet­i­tive mar­ket­place” also played a role.

The about-face by the bank­ing indus­try comes amid grow­ing pub­lic anger over higher bank fees. A move­ment to get bank cus­tomers switch to credit unions — started by a Bank of Amer­ica cus­tomer — had marked this Sat­ur­day as “Bank Trans­fer Day.”

A sep­a­rate online peti­tion ask­ing Bank of Amer­ica to can­cel the $5 fee also had gath­ered more than 306,000 sup­port­ers this week.

“Con­sumers have the power to make the big banks back down from unfair prac­tices if they raise their voices and vote with their feet and their dol­lars,” Norma Gar­cia of Con­sumers Union said in a release Tues­day. In the end, she said Bank of Amer­ica under­stood that it risked los­ing too many customers.

Unlike Chase and Wells Fargo, Bank of America’s announce­ment that it would start charg­ing cus­tomers a monthly debit card fee early next year had come with­out any test­ing in the marketplace.

Pace said the bank had made the deci­sion based on inter­nal sur­veys with cus­tomers. She declined to detail the nature of those sur­veys but said that in the past cou­ple of weeks, “cus­tomer sen­ti­ment changed.”

The bank­ing industry’s retreat from a debit card fee doesn’t mean cus­tomers aren’t see­ing higher fees elsewhere.

This past spring, for exam­ple, Bank of Amer­ica raised the monthly fee on its basic check­ing account to $12, from $8.95.

The Char­lotte, N.C.-based bank is also test­ing a new menu of check­ing accounts with monthly fees rang­ing from $6 to $25 in Ari­zona, Geor­gia and Mass­a­chu­setts. Pace said the pilot pro­gram is see­ing “good results” and that the bank plans to move ahead with its roll­out some­time next year.

Other smaller fees may be nick­ing away at cus­tomer wal­lets as well. In Sep­tem­ber, the bank insti­tuted a $5 fee to replace debit cards, with overnight rush deliv­ery cost­ing $20. Both ser­vices had pre­vi­ously been free. Bank of Amer­ica isn’t alone either.

Chase this year also dou­bled the fee on its basic check­ing account to $12 a month. But the bank says it will end a test in Geor­gia of a basic check­ing account that charged a $15 monthly fee.

And like many other banks, Wells Fargo ended its debit rewards pro­gram ear­lier this year.

The wave of fee hikes comes as the indus­try adjusts to new reg­u­la­tions. A rule that went into effect last month caps the fees banks can col­lect from mer­chants when­ever cus­tomers swipe their debit cards.

Banks in the past year have blamed their fee hikes and pull­back on perks on a new fed­eral law cham­pi­oned by Sen­a­tor Dick Durbin of Illi­nois. The law, which went into effect last month, caps the amount banks can charge mer­chants when­ever cus­tomers swipe their debit cards.

JPMor­gan has said it would lose $300 mil­lion each quar­ter as a result of the reg­u­la­tion; Wells Fargo said it would lose $250 mil­lion a quarter.

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