BofA's Competitors Abandon Debit Fee Plans
So much for safety in numbers. Virtually all of Bank of America's big competitors have completely backed away from plans to charge customers for using their debit cards: Wells Fargo, Sun Trust and JP Morgan Chase. "Bank of America's boxed into a bit of a corner," says analyst Nancy Bush of SNL Financial. " It's going to be difficult for them to find a graceful way out." Bank of America's already had some high-profile slip-ups, like CEO Brian Moynihan having to back-pedal on a promise the bank would start paying a shareholder dividend by the end of this year. So, Bush can't see BofA coming right out like its competitors have saying, "Nevermind. Our customers don't want the fee so we won't charge it." "I think they will apply it in a selective way that basically allows them the out of saying 'We're going ahead with our plans but perhaps we're altering the structure upon which we're going to apply this,'" says Bush. Indeed, Bank of America is reportedly considering giving a pass on $5 monthly fee to people who use direct deposit or have a credit card with the bank. But banking consultant Chris Whalen of Institutional Risk Analytics says customers should be careful what they ask for. "Trust me, everybody's gonna pay for this - at Citi, Wells Fargo, all these other banks - they'll just adjust their pricing somewhere else," says Whalen. That's partly because a new law cuts in half the fees banks were collecting from merchants on debit card transactions. Also, Whalen says the Federal Reserve is keeping interest rates so low that banks aren't making the profits on loans that used to allow them to offer other services - like checking and ATMs - for free. A nationwide network of branches and ATMS is expensive, says Whalen. "So, in a way, you should be thankful to Bank of America for telling you explicitly what they're gonna do," says Whalen. "Because every bank is gonna adjust their pricing on all services - everything."