Consumer Feedback Spurs Regions, SunTrust to Drop Debit Card Fees

Fee-fatigued consumers scored a double victory today as SunTrust and Regions decided to end debit card fees for purchases and issue refunds to customers already charged.
The reversal by both banks followed retreats by even bigger banks on plans to implement new debit card fees, including Chase, the largest U.S. bank by assets, which has shelved checking card fees in a limited testing program, and reportedly will not implement a similar fee system-wide. Wells Fargo also axed a program to test a $3-a-month card fee for purchases.
The pullback by the big banks in recent days comes weeks after Bank of America, the top U.S. bank ranked by deposits, decided to start charging a $5-a-month debit card fee triggered by a single purchase. The plan has caused a rare backlash that emboldened the Occupy Wall Street protest movement and prompted consumer advocates to urge BofA to reconsider.
Bank of America and the other big banks planned or considered debit card fees in response to anticipated revenue losses from recent financial system reform that included the so-called Durbin Amendment. The new policy on “swipe fees” puts a cap on how much banks can charge merchants for debit card fee transactions.
The new formula developed by the Federal Reserve restricts bank fees to about half of the 44 cents on average that merchants were being charged for a single debit transaction.
BofA’s fee, scheduled to begin in January, also inspired “Bank Transfer Day,” scheduled for Nov. 5, a day on which consumers nationwide are being urged to move their accounts from a large bank to a credit union or small community bank. The bank reportedly has softened its plan by providing more exemptions to the fee, including for those customers with “direct deposits,” or the regular wiring of paychecks into checking accounts.
SunTrust customers will no longer be charged $5 a month for debit card fee purchases beginning Wednesday, Nov. 2. Regions will end its “CheckCard” fee for all accounts Nov. 1. Both banks will refund checking card fees already incurred.
“We believe banking is a relationship business and recognize the importance of responding to client preferences,” said Brad Dinsmore, Consumer Banking and Private Wealth Management executive at SunTrust. “We’ve listened to our clients’ feedback and will provide the convenience and security of check cards at no additional charge as part of all of our checking accounts.”
As of June 30, 2011, SunTrust was ranked as the 12th largest U.S. bank by consolidated assets; Regions the 15th largest, according to the Federal Reserve.

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