Bank of America surrenders to consumers on debit fees

It may be the first victory of the Occupy Wall Street movement. However, it's much more likely a victory of common sense and broad public backlash. Bank of America announced Tuesday, that it is reversing its plan to charge a $5 fee for customers that use their debit cards to make a purchase.

LOS ANGELES, CA (Catholic Online) - Bank of America withstood withering fire and scathing public sentiment in September when they announced they would be charging debit card users $5 per month. The plan was aimed at stemming losses from passage of the Frank-Dodd Act which capped interchange fees at $.21 per swipe.

These fees, collected by banks when customers swipe their cards, were charged to the merchants who accepted debit card purchases. Merchants protested that the fees were too high at $.44 per swipe. They also protested that they did not have the power to negotiate down the fees with large banks. Part of the Frank-Dodd Act was designed to address this.

Unfortunately, the Act had some unforeseen consequences. The banks refused to sit idle while a substantial part of their annual income of disappeared as a result of new legislation. Banks immediately began to find ways to recoup their losses. Debit card fees became a tempting option.

Unfortunately for Bank of America, the timing of their decision to announce and implement the fees was quite poor. September saw the Occupy Wall Street movement explode in national headlines. Protesters took to the streets angry with big bankers, big government, and what they saw as income inequality and the lack of opportunity, especially for the young.

Bank of America became a popular target of protests. An unknown number of people, presumably in the thousands, left Bank of America upon hearing the news. Other banks who were testing debit card fees, or contemplating them, recoiled from the backlash and dropped their plans altogether, leaving Bank of America as the only institution planning to impose the fees. Protesters complained that Bank of America was retaliating against the public for passage of the Frank-Dodd Act. They even accused the bank of making "war" on the people during a time of economic hardship.

As part of the backlash, November 5 has been declared "Dump Your Bank Day" as a protest against large banks, and people are being urged to close their accounts at the big banks and move their assets to credit unions, or friendlier institutions.

It is unclear if Bank of America has dodged the PR bullet by retreating from its debit card fee position. Certainly, the banking giant hopes that this announcement will persuade wavering customers to stay on.

In any case, while consumers will follow their hearts, it is a pleasant surprise to see Bank of America, a paragon of the financial establishment, listen to Main Street and heed its call for once.

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