Bowing to consumers, banks back off debit fees
11/01/2011 12:08 AM
11/01/2011 12:08 AM
NEW YORK — Consumer fury has felled the monthly debit card usage fee.
Regions Financial Corp. and SunTrust Banks Inc. followed their big bank rivals Monday by doing away with monthly fees for using debit cards.
Regions, based in Birmingham, Ala., started charging $4 per month in October. Atlanta-based SunTrust began charging new customers $5 per month in June.
The regional banks made their moves after larger banks including JPMorgan Chase & Co. and Wells Fargo & Co. said Friday that they would end testing of similar fees.
Both Regions and SunTrust said they were responding to "feedback" from their customers.
While they didn't elaborate, consumer feedback on the issue has largely been delivered as outrage that banks would charge their customers to get access to their own money.
It was the news last month that Bank of America planned to charge $5 per month for using debit cards for purchases that galvanized the response. Even President Obama joined in the criticism, as did protesters at "Occupy Wall Street" and its sibling demonstrations around the country.
"I think it was a tipping point for consumer perception, especially in light of what the public has done to bail out large banks," said Norma Garcia, manager of Consumers Union's financial services program.
"We're at a point in history where a $5-a-month fee means a lot to a lot more people," Garcia said.
The widespread anger helped spark a movement that is encouraging bank customers to move their money to credit unions, community banks or online-only institutions that don't charge such fees.
"Bank Transfer Day" is slated to take place Saturday, but neighborhood-based institutions around the country have already reported sharp increases in account openings ahead of the movement's designated date for switching.
Bank of America hinted Friday that it would modify its plan and drop the fees for customers who use direct deposit or maintain certain balances. But it has made no official announcement detailing the policy shift.
Banks pushed the adoption of debit cards in the past few decades in part because it is less expensive to handle transactions made with plastic than with cash or paper checks. Debit quickly became popular and surpassed credit cards as the most popular form of non-cash payment several years ago. Usage has continued to increase despite the struggling economy.
But a new federal regulation that kicked in Oct. 1 cut in half the fees banks could charge to retailers for processing purchases made with debit cards. That followed other recent restrictions for charging overdraft fees and tighter rules on credit cards. Banks said they were instituting the monthly debit card fees as a way to make up revenue lost to the new rules.
With SunTrust and Regions backing off, that leaves Bank of America the only major regional or national bank left charging the fees.