Chase, Other Big Banks Retreat on New Debit Card Fees

The big consumer blowback from Bank of America’s planned $5-a-month debit card fee may have had a widespread impact as JPMorgan Chase and other big banks have reportedly decided not to pursue similar fees.
Chase, the nation’s largest bank, has reportedly abandoned plans to implement a debit card fee following customer testing in some states that began earlier this year.
Wells Fargo also told the Wall Street Journal yesterday that it is canceling debit card fee testing it was planning for five states. The bank’s customers in Georgia, Nevada, New Mexico, Washington and Oregon will stop seeing a $3 debit card fee that was scheduled to begin Nov. 15.
In addition to Chase and Wells Fargo, other banks have also opted not to impose debit card fees, including U.S. Bancorp, Citigroup. PNC Financial Services Group and KeyCorp, the Journal reported. None of the banks officially tied their decisions to the indignation felt by consumers over Bank of America’s decision a few weeks ago.
Bank of America’s announcement emboldened the Occupy Wall Street movement, prompting demonstrators to target BofA branches.
Even Bank of America is back-peddling somewhat on its decision, but has not decided to rescind the $5-a-month fee that would be triggered by a single purchase with a debit card beginning in January.
However, BofA reportedly will soften its controversial policy by exempting more customers from the fee, including those who have “direct deposit,” or having their paychecks directly wired into their checking accounts.
Citibank is among the banks reportedly not planning debit card fees, although it has already met with much consumer outcry over its recent decision to revamp checking account fees.
Starting in December, Citibank will charge $20 a month on mid-level checking accounts, unless the customer has combined balances of $15,000 or more in checking, savings and investment accounts or loan balances. The fee was previously waived for combined balances of $6,000 for that level of account, which offers perks such as interest-bearing checking.
Many of the country’s biggest banks have been toying with adding or revamping fee requirements as a result of new consumer-friendly laws enacted over the past 20 months.
Industry estimates say that banks are expected to lose more than $6 billion in annual revenue as a result of the financial reform laws, including some restrictions on fees and retroactive interest rate increases as part of credit card reform, and Federal Reserve limits on how much banks can charge merchants on debit card purchases, also known as “swipe fees.”