Posted on 10/02/2011 9:36:18 AM PDT by Diana in Wisconsin
(The news that BofA customers will soon shoulder a monthly charge for debit purchases sparks outrage — and threats to abandon the bank altogether.)
Bank of America, proclaiming that its bottom line is hurt by new legislation that limits how much money banks can charge retailers for the privilege of letting customers pay with debit cards, announced that it will make up for those losses by charging customers a $5 monthly fee. The fee takes effect in 2012 and affects any customer who makes debit purchases. ATM and credit card transactions will remain free. Predictably, the bank's customers are not happy. Fox Business Network's Gerri Willis even cut up her debit card on air. The company's stock tumbled Friday morning following the news, and customers are threatening to leave the bank.
How much will this backlash hurt BofA?
Customers are going to jump ship: "I've been a more-or-less satisfied Bank of America customer for years," says Jon Gorey at The Street. But if the bank intends to charge a $5 monthly fee for "something I can do elsewhere for free, I'm gone." There are plenty of other options, including local banks and online-only competitors like ING Direct, which, unlike Bank of America, aren't charging any fees for debit use. "Thank you, competitive free market."
This could spell the end of debit: It's easy for customers to avoid these fees, says Daniel Indiviglio at The Atlantic. "They just have to stop using their debit cards." And it's likely that they will. A $5-a-month fee to use debit "would push me not to use it in any case other than emergencies" — especially when that fee doesn't apply to withdrawing cash from an ATM or using a credit card. Indeed, "debit could fade away altogether." "Did Congress kill the debit card?"
Hold on. BofA might change its mind: Sadly, Bank of America isn't the only bank set to start charging debit fees, says Sarah Halzack at The Washington Post. But many see the new fees as "trial balloons" — they're testing customers to see how many will tolerate the charges. Consumers should continue to be vocal about their displeasure with these banks, "as they might ax the fee if enough customers gripe about it." "In wake of Bank of America's new debit charge, tips on how to avoid fees"
Actually, Bank of America may win this fight: For now, angry customers are threatening to abandon the bank, says Jessica Dickler at CNN. But it's Bank of America "that could have the last laugh." After all, changing banks isn't exactly a breeze.
Once consumers realize the hassle of it all — from having checks printed to switching their automatic payments — they're likely going to suck it up and stay with Bank of America.
My cousin told me in June this and Banks are not allowed to tell the truth about why the Debit Card fees
Someone on FB said they went to a BoA branch and there were long lines of people yanking their accounts and that person drove to a different branch and found the same thing.
This person lives in the Galveston-Houston TX area.
Apparently most of the people that person asked said they were putting their money into a credit union.
See what happened to Netflix over $7.99? I think BofA could see a sizable amount of defections.
I changed banks then reopened BOA because of their lower fees for international banking, but the debit card is the only way to access the money.
This might be severe enough to kill off my last account with them.
I quit doing business with BofA many years ago when they processed checks before their deposits - resulting in NSF check fees when the money was in the account to cover the checks. Been with a credit union now since around 1994 and was perfectly happy, until they jacked up the interest on my credit card by four percentage points because of a disputed medical bill that showed up on my credit report. Okay, fine, so now I still use the card but I pay it off as soon as I use it. Bingo, no interest charges at all. Who’s the real winner and loser now?
The backlash should be directed at Congress.
Part of the reason Congress gets away with this is that every time they do it, people blame it on private industry. It’s not the result of the capitalist system. It’s the result of regulation, and government.
I dumped Bank of Hispanoamerica, the bank of the illegal aliens, when the signs started appearing in Spanish.
Hablo espanol y me encantan las cosas tradicional de la cultura mexicana, but I speak Spanish because I want to, not because I need to.
Have 4 months left to pay off a loan. I have reduced my account to 5 bucks. Will be leaving after the last payment.
We were in the middle of dumping these vermin anyway. Timeline just got moved up.
I remember going to a BofA branch to make a payment on my CC. I’m standing in line and a manager comes up asking if anyone just wants to make a payment. I said I did. My payment was for $14. The manager took my coupon and check and I left. Later when I viewed my checking statement I saw where I was charged $11 for an “assisted payment” - $11 for the manager to take my payment. $4 went to the card! I pulled my account the next day.
“The backlash should be directed at Congress.
Part of the reason Congress gets away with this is that every time they do it, people blame it on private industry. It’s not the result of the capitalist system. It’s the result of regulation, and government.”
Worth repeating. Over and over.
This is a direct result of government regulation. If you think this is only going to affect B of A you are mistaken. Things like limits on overdraft fees, etc. etc. are going to cost all consumers money. Banking services cost money and the more government regulation they have to deal with the more these services are going to cost you, simple as that.
Probably illegal immigrants can't get credit cards. But a debit card is given to anyone who walks into a bank with a few dollars in hand.
I closed my account with them a long time, but thanks for calling me irresponsible.
We are BofA customers...husband, wife, two daughters (each with an account). So that $5 fee comes to $20 for our family. We’ll switch banks very soon.
There is a possibility here in a new, independent company creating a much higher security, 100% backed debit card. It would have a very different business model than the current credit and debit card system, and would instead be much like the alternative currency called ‘scrip’.
Under a State license, it could effectively become a State currency, but not restricted to the constitutional limit on States that they may only issue currency backed by specie, gold and silver, because it is run by a private company. Instead, it would be licensed, regulated, insured and audited by the State.
And overhead for the system could be very small, just telephone lines and computers.
How it works is by issuing what looks like a photo ID to users, when they sign up. On the back of their card is a heavily encrypted, but public domain bar code, called Data Matrix.
http://en.wikipedia.org/wiki/Data_matrix_%28computer%29
Data Matrix can be “read” by a common cell phone camera.
This means that when two people sign up for the system, and want to buy and sell something, either one can use their cell phone to make the sale.
They make a call to the debit card company. Then the owner of the cell phone photographs his ID card Data Matrix, and his picture is displayed on the screen, so that the other person can see that they are indeed the card holder. Then the other person takes a picture of their ID card Data Matrix, so their identity is affirmed as well.
Then the seller enters a price, including tax, that is the cost of the item being sold, along with their PIN number. Then the buyer enters the same number, along with their own PIN number. And the money is exchanged electronically from one account to the other.
This could be done either with US dollars, or a State currency, which is not legal tender. In the latter case, prices could be fixed ahead of time, so that it would be a stable currency, even if the dollar became unstable.
With each transaction, both sales tax and a small transaction fee would be deducted.
The advantages of doing this are first, the stabilization of a State’s economy if there was a major economic catastrophe that made the dollar unstable. This would keep both local governments and the marketplace operating. And since it would be 100% backed with the debit card holdings, no matter what happened, users would be guaranteed to get back every penny they had put into the system.
Finally, this is outside of typical federal financial regulation, and under the complete control of the State.
When I get home I’m joining the local credit union. Moving everything over to them. I found out too that CU’s don’t charge each other for using their ATM’s - same with savings and loan’s - at least that’s what I heard. They reciprocate with each other.
Barney prefers the back door.
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