Bank of America has canceled its plans to charge a $5 monthly debit card fee.
The bank said Tuesday that the decision to eliminate the planned fee was in response to customer feedback.
“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” said David Darnell, co-chief operating officer of Bank of America, in a statement. “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.”
Darnell didn’t say whether Bank of America’s new debit card fee had led to an increase in account closures. He said the decision was also in response to the “changing competitive market.”
Bank of America operates 93 branches in Nevada. As of June 30, the bank had $10.7 billion in deposits statewide, according to figures collected by the Federal Deposit Insurance Corp.
Bill Uffelman, president and chief executive officer of the Las Vegas-based Nevada Bankers Association, said monthly debit card fees were a response to new federal regulations that capped debit card interchange fees — the payments merchants make to banks to process customer transactions.
He said the typical retail bank in Nevada, such as Nevada State Bank or Bank of Nevada, didn’t test debit card fees and weren’t “caught up in this.”
The decision by Bank of America to cancel its planned monthly fee comes amid public outrage over higher bank fees. The bank also reversed course after competitors JP Morgan Chase & Co. and Wells Fargo & Co. decided against similar debit card fees.
Citigroup Inc. and U.S. Bancorp already had rejected the idea of fees, and SunTrust Banks Inc. and Regions Financial Corp. eliminated their check-card fees on Monday.
“In the end, Bank of America understood that it risked losing too many valuable customers by charging an unfair debit card fee,” said Norma Garcia, manager of Consumers Union’s financial services program.
A movement to get consumers to close their checking accounts at Bank of America and other large banks and switch to credit unions is scheduled for Saturday.
The movement, known as Bank Transfer Day, was founded earlier this month by Kristen Christian, a Los Angeles art dealer and Bank of America customer who said she was angry at increasing fees.
As of Tuesday, 33,735 people on Facebook had “liked” the Bank Transfer Day page.
“Consumers should be mindful going forward that, despite the recent news, banks still need to find a way to make up revenue,” said Tina Ramos-Ingold, a spokeswoman with the Nevada and California Credit Union Leagues.
Ramos-Ingold said the public debate over bank fees the past few weeks has allowed more consumers to become more aware of credit unions as an alternative to large financial institutions.
Meanwhile, credit unions in Las Vegas are being cautious about Bank Transfer Day.
Greg Barnes, senior vice president of marketing at One Nevada Credit Union, attributed consumer anger over bank fees to the credit union’s “40 percent increase in new accounts in October.”
As for participating in Saturday’s protest, Barnes said One Nevada would let others participate as it continues with its marketing campaign to make the region aware of its recent name change.
One Nevada, which was once Nevada Federal Credit Union, recently completed its conversion from a federal credit union to a state-chartered, federally insured financial institution.
America First Credit Union, with eight branches in Southern Nevada, is urging consumers through Facebook and other social media to “make a statement and move your accounts, loans and credit cards” by Saturday.
The Salt Lake City-based credit union described Bank Transfer Day as an opportunity to “re-invest in our local communities through the transfer of funds from big banks to credit unions.”
Card issuers now must find other ways to replace revenue lost after the Federal Reserve capped fees on debit-card transactions last month. The Fed settled on a maximum fee of 21 cents plus 0.05 percent of the transaction, which works out to about 24 cents on the average debit purchase.
The new limits are much lower than the previous cap of 44 cents debit purchase. The cap on “swipe fees” applied only to debit transactions and not credit cards.
The cap was supported by some of the largest retail chain stores and the Retail Industry Leaders Association.
In a statement Tuesday, the Arlington, Va.-based trade association said it plans to lobby for similar relief on credit cards.
“Today’s news is proof-positive that consumers remain swipe-fee reforms biggest winners,” said Katherine Lugar, executive vice president, public affairs with RILA. “The outcome is just what consumers deserve, what reform advocates predicted and what we will fight to extend to the credit card market.”
The swipe fees exploded in recent years and had cost retailers almost
$20 billion annually.
Uffelman of the Nevada Bankers Association noted that while reforms to swipe and debit card fees have cost the banking industry billions of dollars, large retail chains have yet to pass their savings on to the consumer. He argued that retail chains haven’t lowered prices because of the cap on swipe fees.
“When I’m going to pay for something,” Uffelman said, “do I get a 20 cent reduction in my transaction? No, it all goes toward the bottom line.”
He said the cost of doing business has been shifted back “to the financial institution whose customers like using that piece of plastic to pay for things.”
Contact reporter Chris Sieroty at email@example.com or 702-477-3893.