In case you hadn't heard, Bank of America announced that, beginning in 2012, it was going to begin charging $5 per month for account holders who used their debit cards for retail transactions. The move is in response to the federal government via the Dodd-Frank bank reform law putting a cap on so-called "swipe" fees banks could charge retailers when a customer used a debit card for a purchase. The charge is expected to generate about $3 billion per year for the banking giant.
As one might expect, the outcry from customers and critics was vocal and widespread. Current customers were all over Twitter claiming they would be closing their accounts in protest. Senator Dick Durbin (D-Ill.) hammered the institution in a statement saying, "It seems that old habits die hard for Bank of America. After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers."
But, despite all the calls for protest and angry tweets, it is likely bankers will find similar charges elsewhere. Bank of America is the first, but they will not be the last.
Chase has already been testing $3 debit card fees and raising rates on fees charged to non-account holders for use of bank ATMs. Other large banks are planning similar moves in the coming year.
And it isn't as if they are losing the ability to charge all "swipe" fees. Those fees are simply being capped at about half of what they were previously, half is better than nothing. It is worth noting that many of these larger banks also received massive bailouts from the federal government.
None of this accounts for the monthly checking account fees, overdraft charges, overdraft "protection" fees and charges for using ATMs that don't belong to your bank. It's amazing, but not terribly surprising, that with all the technology and automation that has happened in banking over the last few years that fees have seemingly increased while interest rates have gone down.
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And if you think smaller banks and credit unions are the answer, don't count on it. While they are exempt from caps on "swipe" fees for now, there is growing concern that retailers will eventually stop honoring cards from institutions with higher "swipe" fees causing those banks to simply find other ways to keep the income flowing, like debit card charges.
Ultimately, the choice will come down not to who charges the least, but who provides the best services for the monthly fees they do charge. Bank of America may seem like the evil empire right now, but other banks will follow suit and, unless you choose to put your money in your mattress, you'll have to pay the fiddler eventually.
In (dis)honor of the new Bank of America charges, we give you one of the most unintentionally hilarious moments in the history of the institution: One bank.