By Jamie Pietras
Having incensed customers, inspired nationwide consumer protests, and inadvertently given community banks and credit unions a bonanza of free marketing opportunities, Bank of America, Wells Fargo, JPMorgan Chase and SunTrust Banks Inc., are all dumping or changing new monthly debit card fee strategies.
BofA was supposed to begin its much-maligned $5-a-month fee for debit card use in 2012, but heavy consumer backlash and strong marketing offensives from competitors have caused the bank to consider new ways for consumers to avoid it—these include simply having a direct deposit or credit card account with the bank, The Business Review reports. Wells Fargo and Chase, meanwhile, have suspended pilot debit card fee programs, and SunTrust is abandoning a monthly fee it put into effect in June, according to the AP.
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The fees came as a response to federal regulations that put a limit on the amount of money banks can collect from retailers in “swipe fees” imposed every time a consumer makes a debit card transaction. To recoup the billions large banks would lose under the new policies, banks shifted the burden onto consumers.
In recent weeks, a movement encouraging people to transfer their money away from mega-banks and toward community banks and credit unions that could help them avoid fees coalesced amid street protests and online. The Move Your Money project offers an online tool for finding a new financial institution; Nov. 5 is a designated “Bank Transfer Day.”
Credit unions are gearing up for the potential barrage of new customers. In the last month, traffic to The National Association of Federal Credit Unions’ online credit union locator was up 350 per cent in the past month, according to The Washington Post. Despite the big banks’ recent gestures, the momentum isn’t expected to die down, says Credit Union Times. Bill Handel, the vice president of research and product development at Raddon Financial Group in Chicago, tells the publication that “the difference between the mega-banks and community-based financial institutions was significant even prior to the imposition of debit card fees and so the imposition of these fees was a means by which this difference could be driven home.”