Top Banks Cancel Debit Card Fees
Less than a month went by, since the Durbin Amendment to the Dodd-Frank Act became effective October 1, 2011 and some banks have already decided to end debit card fees. This was “the straw that broke the camel’s back”, when Bank of America announced a $5 monthly debit card fee beginning in 2012. At that time, some banks had already announced charging a debit card fee and others were already doing so.
The mega banks were viewed as only interested in profits and not in their customers. Many consumers were still angry about the bailout of the major banks. Politicians encouraged consumers to switch banks and chastised the banks. Credit unions reported an increase in new account openings. There was enough backlash from consumers that some of the mega banks reconsidered their policies.
The Durbin Amendment lowered the transaction fee that merchants pay banks for debit cards from $.44 to $.21. Some banks quickly changed their policies to recoup lost revenues on or before October 1, 2011. It was projected that banks would lose $6 billion based on the new law. Wells Fargo began testing a monthly fee of $3 in five states beginning Oct. 14, 2011 and JP Morgan Chase tested a fee in two states from February to November 2011. SunTrust and Regions Financial Corporation starting charging a monthly fee for debit card usage.
The end of October 2011, Wells Fargo and Chase announced that they won’t charge for debit cards after their test periods were over. On November 1, Bank of America, SunTrust and Regions announced that won’t charge the fee anymore; Regions will offer a refund. Citigroup, Huntington National Bank, Ally Bank, USAA, KeyCorp, PNC and TD Bank won’t charge for debit cards either.
Consumers spoke loudly by closing accounts at financial institutions that began charging debit card fees and moved to credit unions. It is great to see that you can have some impact on the greedy and impersonal banks. You do have a choice. Changing banks can be a hassle, make sure you are aware of all the pros and cons and hidden fees before you switch.
Credit Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. Follow him on Twitter here.