Banks could have made up to $875 million a month off of their now-dead debit card fees, according to an analysis from Market Rates Insight.The projections are based off of each of the 175 million U.S. adults with bank accounts paying a monthly $5 fee, the amount Bank of America(BAC) had planned on charging its customers before becoming the last major bank to ditch its debit card fee on Tuesday.
Banks could have made up to $875 million a month off of their now-dead debit card fees.
Wells Fargo(WFC) and JPMorgan Chase(JPM) were testing out $3 and $3.50 fees, respectively, when they decided to pull their pilot programs late last week.
But Market Rates Insight says the fees — as well as the consumer backlash they incurred — could have easily been avoided if banks had simply lowered their deposit rates by just 0.01%. This decrease would have reduced interest expense at financial institutions by $1.5 billion per month and netted almost twice the amount debit card fees would have brought in.
Market Rates Insight’s analysis isn’t the first to indicate debit card fees were never really necessary.
Earlier this week, Odysseas Papadimitriou, CEO of credit card comparison Web site CardHub.com, pointed out that checking account fees already recoup well more than the $28 per customer that financial institutions will lose each year as a result of the Durbin Amendment, the legislation most banks attributed as the reason for instituting new charges.
Now that the banks are letting you keep that extra 5 bucks, click here to find out the best and worst places to hide your cash >