Bank of America has decided to drop plans to charge a $5 monthly fee on its debit cards.
"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," David Darnell, co-chief operating officer, said in a statement from the Charlotte, North Carolina-based lender today. "As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."
The reversal comes after its largest competitors abandoned the strategy amid a consumer rebellion.
Wells Fargo & Co., the No. 2 debit-card issuer, said last week it had decided not to charge depositors $3 a month for debit cards after testing the fee in five states. Atlanta-based SunTrust Banks Inc. and Regions Financial Corp., based in Birmingham, Alabama, said yesterday they would eliminate monthly check-card fees in response to customer feedback.
Card-issuers are seeking alternative revenue sources after U.S. caps on debit-card transaction fees took effect last month. The limits, mandated by the Dodd-Frank Act, may cut annual revenue by $8 billion at the biggest U.S. banks, according to data compiled by Bloomberg Government.
Banks are on a quest to target their most lucrative customers over those made less profitable by recent regulations and that has led to increasingly sophisticated analytics and segmentation, as well as new fees for basic services.
Citigroup Inc., which doesn't impose debit-card fees on customers, will charge checking customers $10 a month unless they maintain a $1,500 average monthly minimum balance or make one online bill payment and one direct deposit per month, the New York-based bank said in September.
"We asked customers what they thought about it," Stephen Troutner, head of U.S. consumer and small-business banking products at Citigroup, said in an e-mailed statement. "They said that it would be a massive source of irritation for them. They spoke. We listened."
JPMorgan Chase & Co., the third-biggest debit-card issuer, opted against charging debit-card fees, the Wall Street Journal reported. Minneapolis-based U.S. Bancorp, the No. 4 debit-card issuer, said Oct. 19 it has no plans to assess a fee.
An online survey conducted last month by the National Foundation for Credit Counseling showed that 3% of 2,404 respondents would continue using their current debit card "as usual" if a fee were imposed and 62% would find a bank that doesn't charge a fee, according to an e-mailed statement from the organization.
Lawmakers and President Barack Obama spoke out against Bank of America's fee decision after it was announced in September. U.S. Senator Richard Durbin, the Illinois Democrat who pushed the debit caps through Congress, called on Bank of America customers to "get the heck out of that bank." President Obama questioned whether the lender has an "inherent right" to charge the fee.