BoA Customers Unhappy With Debit Card Fees

All forms of social media was abuzz on Friday with outraged Bank of America (NYSE:BAC) customers, who are unhappy with the debit card fees introduced by the bank. Many customers have vowed to completely boycott the bank, or to switch banks in response to the controversial move by the bank.

The bank made it official announcement that it was increasing its debit card fees by charging $5 per month to customers who made debit card purchases. The debit card fee has the potential to amass close to $3 billion a year for BoA, by charging a customer almost $60 every year.

Many customers took swift action by deciding to close their BoA accounts or completely stop using their debit cards and instead opt for their credit cards. A few customers also urged President Barak Obama to take action. It was not just infuriated customers who spoke out against the fees, Senator Dick Durbin also slammed the bank by calling the fees unfair.

However, undeterred by these enraged customers, other major banks are set to follow suit. The banks are left with no other option but to recoup lost revenue that will be lost because of the federal regulations that will take effect on Saturday. The new regulations will put a cap on the amount charged to merchants for making debit card transactions. This will lead to banks losing revenue of around $6.5 billion each year. In the hopes of offsetting this loss in revenue, banks have to resort to increasing the debit card fees of the customers and also have to raise the minimum account balance required to be maintained in order to avoid various fees.

Other banks such as Wells Fargo & Co., J.P. Morgan Chase & Co. and also Wells Fargo & Co. are testing similar fees that will be introduced in some states on a trial basis.

The Federal Reserve introduced the debt card fees cap in June and has been amount the most contentious regulations made. According to the regulations, Banks will not be able to charge more than 24 cents to the merchant for every purchase made using debit cards. Banks had earlier warned the federal regulators that any such change will lead to increase in banking costs for the end use.

BoA has been hit by huge losses from its bad mortgage loans and is facing multiple federal lawsuits. The bank’s decision to charge $5 is higher than what other banks are deciding to charge. Wells Fargo is planning on a $3 fees from Oct 14 in select states.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.