Two weeks ago, I wrote about whether you should
use your credit card more
in light of new fees several banks would be charging their
customers for non-ATM debit card transactions.
Bank of America
) led this group, with plans to charge customer $5 for each month
they use their debit cards.
) had rolled out charges as tests in certain regions. Other
, planned on adding fees to its free checking accounts.(
) planned on raising its minimum balance requirements and monthly
maintenance fees by the end of the year.
The new debit-card fee was designed to recoup lost revenue
from debit-card swipe fees, estimated at $8 billion, which the
Durbin Amendment of the Dodd-Frank Act had limited. But because
of customer protest, most of those plans have been scrapped.
) have canceled their fees and refunded customers who had been
charged. Citing "customer feedback and the changing competitive
marketplace," Bank of America has cancelled its debit-card
charge. Wells Fargo is canceling its five-state pilot program,
which was set to begin Nov. 15.
The banks may have been beaten into submission by outraged
customers, but it's no doubt a temporary victory. A Facebook
movement for Bank Transfer Day, held Nov. 5, called for people to
switch from for-profit banks to nonprofit credit unions. The
movement began with 500 people and by Saturday had 73,000
supporters, according to Bank Transfer Day's founder, Kristen
Christian. "If you don't believe in a company's practices or feel
that a company's practices are unethical, then, very simply, you
should not have money with that company," Christian wrote in a
It's a sentiment that resonated with bank customers. From
Buffalo to Los Angeles, lines formed at credit unions and small
banks on Saturday. In several cities, the movement was joined
with the Occupy Wall Street movement, marching through town
centers and protesting local branches of large banks. In Oakland,
protestors temporarily shut down a Wells Fargo branch.
The Credit Union National Association estimates that at least
650,000 customers have joined a credit union since Bank of
America announced the now-defunct fee on Sept. 29. Since then,
credit unions have added $4.5 billion in new savings accounts,
from both new and existing members.
We won't know until quarterly earnings are reported if Bank
Transfer Day will have any impact, but it's not likely. $4.5
billion is a large amount for credit unions, but each of the 10
largest banks have more than $100 billion in assets. Individual
accounts, with moderately low balances, such as the type that
would have been hit hardest under many of the proposed fees,
don't typically generate much revenue for larger banks. And the
number of people who committed to switch to a credit union is far
less than 1% of Bank of America's customer base.
Bank Transfer Day may have changed things for the customers
who switched, but it doesn't look like it changed things for the
banks they left. The debit-card fees may be off the table, for
now, but banks will hardly stop trying to tack on fees to recoup
the lost revenue. Banks such as
) , SunTrust,
(Nasdaq: FITB) , and
(STD) ) are looking for other ways to generate revenue, including
pushing customers toward credit cards and prepaid cards, which
aren't subject to the debit-card cap.
While the banks may have rescinded their debit-card fees,
they're looking for creative ways to recoup those fees in other
areas. In the long term, those fees may be tacked on to
previously free checking, a higher overdraft or low-balance fee,
or other transaction fees. In the short term, the aggressive
advertising for credit cards has begun, and will no doubt
Charge wisely, Fools.
Regardless of whether you're switching back to plastic or
staying with cash, your credit card may soon be worthless. The
Motley Fool's Rule Breakers team has taken a hard look at the
industry and created this special video report,
"Your Credit Card May Soon Be Worthless. Here's
It's one of our most popular features.
Click here to watch it today.
It's free for Fools.
Keep an eye on how these banks are performing in the days
ahead by adding these companies to My Watchlist.
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