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We're mad as hell and we're not going to take it anymore (To steal a phrase ;)
Banks need more revenue? Stick it to the sheeple.. Again..
Post source
Greg
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By Andra Bryan Stefanoni
news@joplinglobe.com
PITTSBURG, Kan. — The recent announcement that Bank of America will begin charging debit-card holders $5 a month for using their cards has left some seeing red and others rethinking whether they should stay with their bank.
Kansas state Rep. Bill Otto, R-Iola, had plenty to say about the matter as he loaded groceries into his car last week in Pittsburg, Kan.
“It makes me really mad. We bailed them out, and now this. Most of our small banks got no bailouts — nothing. Just the big boys. If my bank does that, I won’t pay it. I won’t,” he said.
He’s not alone. A recent poll conducted by GfK Roper Custom Research North America found two out of three debit-card users said they will ditch their cards if their bank starts charging a monthly user fee. Four out of five debit-card holders said they would switch banks to avoid monthly fees.
“I’ve heard about it, and I’m confused by it,” said Niki Rahe, of Weir, Kan., who was on a shopping trip in Pittsburg last week and used her debit card for just about every purchase.
“I don’t understand it. I would switch banks if that happened to me,” she said.
Rahe banks with Labette Bank. She said she would continue to do so as long as no fees are attached.
“I shouldn’t have to pay to use my money,’’ she said.
Bank of America’s move comes as debit cards are increasingly being used to replace cash. Banks are apparently looking for ways to offset the loss of revenue from a new rule by the Federal Reserve Board that limits how much they can collect from merchants whenever customers use their debit cards.
Betty Riess, spokeswoman for Bank of America, said the regulations have changed the economics of offering a debit card. Called interchange fees, the revenue source once generated billions of dollars for banks and credit-card networks. The merchants paid banks 1 percent to 2 percent of the amount of each purchase — about 44 cents on the average debit-card purchase.
According to the Nilson Report, which tracks the payments industry, those fees generated $19 billion in revenue for banks in 2009. Swipe fees will be capped at 21 cents to 24 cents per transaction.
So, beginning in 2012, Bank of America will introduce through a phased rollout a $5 monthly usage fee for customers who use their debit cards for purchases. Chase and Wells Fargo also are testing $3 monthly debit-card fees in select markets.
Bank of America’s announcement carries added weight because it is the largest U.S. bank by deposits.
The fee will apply to basic accounts, which are marketed toward those with modest balances. It will be in addition to any existing monthly service fees. For example, one such account charges a $12 monthly fee unless customers meet certain conditions, such as maintaining a minimum average balance of $1,500.
Those who only use their cards at ATMs won’t have to pay.
Riess said Bank of America offers customers choice and flexibility in how they bank.
“Customers who value debit’s features and convenience can choose to use their debit cards by paying the fee. Customers who don’t want to pay this fee can continue to access their checking accounts to get cash from ATMs, through online bill pay, and increasingly through their mobile phones and with person-to-person transfers,” she said.
This summer, an Associated Press-GfK poll found that two-thirds of consumers use debit cards more frequently than credit cards. But when asked how they would react if they were charged a $3 monthly debit-card fee, 61 percent said they’d find another way to pay. With a $5 fee, 66 percent said they would change their payment method.
Riess said the new fee allows Bank of America to continue to offer the service and convenience customers have come to expect — including fraud protection, overdraft prevention, record keeping, fraud monitoring and savings programs.
Jessica Bushnell, of Pittsburg, is a frequent debit-card user and Bank of America account holder. She was resigned to paying fees of some sort, she said, as that “goes with the territory. They are trying to get more money, as usual,” she said, as she prepared to pay for groceries.
“They had instituted something before if a balance was below a certain amount, so I went to e-banking so I wouldn’t have the fees. I don’t know if they’ll charge me with this particular account. I guess I’ll just have to wait and see.”
As she shopped, Theresa Swink, of Pittsburg, said she was preparing to take action. “We’re totally against it and we’re taking some money out of Bank of America to move it elsewhere,” she said.
Joe Conrad said he has already taken action by moving his account to a local bank.
“I moved our accounts to a locally owned bank, Citizens Bank, and we’re really, really happy because there are no fees,” he said. “It’s the first bank in a long time that hasn’t had fees of some sort attached.”
A study by Bankrate.com recently found that 45 percent of checking accounts are now free with no strings attached, down from 65 percent last year and 76 percent in 2009. Customers still can get free checking in most cases, but only if they meet certain conditions, such as setting up direct deposit.
Bank of America customers who “bring more of their business to the bank” will be rewarded, Riess said, by having no fees attached to their debit card accounts.
“The debit card will be one of the many complimentary services available to customers in certain premium accounts. In addition, Wealth Management/Merrill Lynch with qualifying balances and U.S. Trust clients will not be charged the fee,” she said.
Customers who will be affected will be notified in writing at least 30 days before Bank of America begins assessing the monthly fee, Riess said.
“Again, our objective is to be clear, predictable and transparent about our fees, and we have structured our products so that customers understand what they are getting and how much it costs.”
The Associated Press contributed to this report.
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