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Senator Durbin slams Bank of America's debit card fee
By Catholic Online (NEWS CONSORTIUM)
October 1st, 2011
Catholic Online (www.catholic.org)
October 1st, 2011
Catholic Online (www.catholic.org)
Senator Dick Durbin (D-Ill.) didn't mince words when he heard news of
Bank of America's decision to charge their customers a $5 monthly fee to
use their debit cards. "It's overt, unfair and I hope their customers
have the final say," the Senator said. While Bank of America will not
charge customers an ATM fee, the $5 monthly debit card fee applies
across the board - even if customers only use it once to purchase $1
roll of breath mints.
"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," Durbin said in a statement.
The $5 charge may unfortunately become the wave of the future, as an industry representative said such fees may become more common as banks try to make up for lost revenue from a different kind of fee that will be capped under a new set of financial regulations on October 1st.
Banks had previously been collecting billions in fees from merchants from whenever customers swiped their debit cards. Starting Oct. 1, a regulation will cap those fees.
Bank of America is the largest U.S. bank by deposits, while still reaping $45 billion in federal bailout money. The bank received the first chunk in 2008, the remainder in 2009 to cope with losses at Merrill Lynch. While Bank of America repaid all the bailout money it received in late 2009, the federal government made more than $4 billion off the arrangement.
"Banks that try to make up their excess profits off the backs of their customers will finally learn how a competitive market works," Durbin warned.
Bank of America's new fee will apply to basic accounts and will be in addition to any existing monthly service fees. One of the bank's basic accounts charges a $12 monthly fee unless customers meet certain conditions, such as maintaining a minimum average balance of $1,500.
A fee for using debit cards is a unique concept for many consumers, unheard of before this year. There are signs it may soon become an industry norm.
SunTrust, a regional bank based in Atlanta, began charging a $5 debit card fee on its basic checking accounts this summer. Regions Financial, which is based in Birmingham, Ala., plans to start charging a $4 fee next month. Chase and Wells Fargo are also testing $3 monthly debit card fees in select markets.
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