Big banks decide against debit fees, After witnessing the backlash by consumers and politicians when Bank of America last month introduced plans for new debit card fees, most other big U.S. banks are opting not to impose similar charges.

Hot Feature: Volcker Rule Will Cost U.S. Banks $1 Billion

Banks against debit fees: After eight months of consumer testing, JPMorgan has decided not to charge customers who use their debit cards to make purchases, joining U.S. Bancorp , Citigroup , PNC Financial , KeyCorp in its decision. None of the banks have said they made their decisions because of public outcry over Bank of America’s fees. US Bank shuns debit fees,

“We looked at all options and quickly decided it didn’t fit with our overall strategy,” said David Bowen, who runs the consumer-product business at Key.

Banks have been piling fees onto customer accounts in an attempt to recovery billions of dollars in revenue that will be lost due to new restrictions on debit cards, credit cards, and overdraft fees. Most big banks have already eliminated free checking for customers not meeting certain criteria. BoA $5 debit fee,

Bank of America plans to start charging customers $5 a month if they use their debit cards to make purchases. SunTrust Banks will also be tacking on a $5 monthly fee on some debit card users, while Regions Financial is charging $4 a month on some accounts. Wells Fargo is testing a $3 monthly debit card fee in five states.

Because Dodd-Frank will reduce by roughly half the amount that banks are permitted to charge merchants for debit card transactions, many banks are looking for a way to make up that revenue elsewhere. Banks are expected to lose more than $6 billion in annual revenue as a result of the new rules.

However, the new fees might backfire — many politicians, members of Congress, and even President Obama have spoken out against them, while many customers have threatened to close their accounts and move to other institutions. Community banks and credit unions have been encouraging consumers to move to smaller financial institutions that don’t charge such fees.

Don’t Miss: Here’s What Banks Must Do for Eurozone Restructuring

Aware of the possible repercussions of debit-card fees, many banks will likely increase charges in other areas to make up lost revenue, while some will instead focus on winning over more customers and convincing them to sign up for more financial products.

Source: yahoo


Blog Archive

Related Posts Plugin for WordPress, Blogger...