Bank of America rescinded their debit card fee this week, but that won’t stop me from leaving them. The way they did away with their fee makes me suspicious of their motives.

A couple of weeks ago I used this column space to lament what had become of Bank of America, which I had foolishly considered my neighborhood bank simply because they had a branch near my parents’ house and I banked with them for about a decade.

I vowed to leave them for an online bank because of their outrageous $5 monthly fee for debit card use, not because $60 a year will be financially crippling for me, but because it woke me up to the fact that banking with BofA is a choice.

Every month I stay with them is another month that I choose to buy their lousy product. And even without the debit card fee, Bank of America’s checking and savings accounts are lousy. Simon wrote about all the other fees that are being introduced to non-debit related services here just yesterday.

An Abusive Relationship

It’s hard, looking at recent events, not to conclude that banking with Bank of America is not going to be quite as fun as it used to be.

Like when you first see your new girlfriend get unreasonably mad about something seemingly mundane, Bank of America has shown its true colors, and it is time to get out of this relationship before things go any further south. Nothing they do now can make you unsee what you have seen.

In the middle of last month, House Democrats wrote a letter calling for an investigation into price signaling or some other sort of price collusion on the part of big banks in the wake of Durbin. This accusation seemed to have little merit at the time, but looking back at how things played out now, you have to wonder if, maybe, it did.

While some banks snuck into the debit card fee business (Regions and SunTrust, to name names) and others introduced fees on a trial basis as if they were curious to find out what their customers thought of paying for a formerly free service (Wells Fargo and Chase, we’re looking at you). Bank of America went right ahead and announced to the world that it would cost $5 a month to use your debit card, with few ifs, ands, or buts.

It’s interesting, as Simon noted yesterday, that BofA didn’t at least introduce a testing phase, or do this quietly. Their apparent pride in their fee, and their massive market share does make their motives worth reconsidering.

Bank of America insisted quite vociferously that they were merely making up for lost revenue, though they never deigned to make clear exactly how they arrived at the $5 a month amount when other similarly sized banks were trying out smaller fees.

CEO Brian Moynihan said on CNBC, in early October: “I have an inherent duty as a CEO of a publicly held company to get a return for my shareholders.”

Richard Hunt, President of the Consumer Bankers Association, a national trade association for retail bankers, told PBS “I assure you the banks would not have raised fees on any single customer if they didn’t have to.”

Other banks and industry types were happy to agree with both Moynihan and Hunt on these points, while they waited to see what would happen with the growing outrage over the fees. As customer dissatisfaction grew and November 5th (deemed Bank Transfer Day) grew closer and closer, more banks dropped their fees, leading to a domino effect that stopped right at BofA’s massive feet.

Was All That Talk a Ruse?

Only then, when every other large bank had already done so, did Bank of America finally cave to their customers’ demands. This makes BofA’s prepared statement — that they rescinded the fee to satisfy their customers — seem even thinner than typical press release spin.

Is it so hard to believe that Bank of America tried to take advantage of their size and industry dominance by signaling to the rest of the industry that they could charge similar fees, too — if everyone does it, it’s cool.

When banks backed out, BofA held their ground until they faced the prospect of doing serious damage to their customer base.

This now raises a few questions: will Bank of America be downsizing now that they did not implement this necessary fee? What happened to CEO Brian Moynihan’s obligation to his shareholders? What happened to Richard Hunt’s statement that banks “have to” raise fees? Will all of our big retail banks be going out of business? or laying off workers by the busload, now?

Or, perhaps these debit card fees were indeed the price gouging that people suspected. And Bank of America was out in the front of the pack, leading the charge, letting the others know that this was a safe way to make up for swipe fee reform, so long as they all did it together. If this is what they aimed to do, it blew up in their face rather spectacularly.

I offer no proof, because this is something you cannot prove — just a suspicion. But I know that I’ll be leaving Bank of America, debit card fee or not.

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  • Rwaters839

    I have already started converting over to an online bank a week ago and cutting back on Bank of America to the minimum services that they offer free, so far I am very satisfied. The online bank debit card has no fees, awards points for its use, I don’t even have to go to the ATM to deposit a check, I can do it all online, everything online and  even get paid interest on the checking account balance, thank you Bank of America for opening my eyes, don’t even think about getting a mortgage from BofA, I have been through that hell just a little while ago, I was a 22 year customer with your bank. .

  • Jay Gould

    All big banks have now abandoned their plans to charge debit card fees, but they still need to make up for the huge revenue losses they will suffer as a result of the passing of the Durbin Amendment ($7 billion annually or so) and they will find a way to do so.  It could be that they choose to cut back on credit card rewards or introductory offers or it could be something else.

    The bottom line is that at the end new revenue sources will be found and the banks will recoup their losses.  As I’ve said before, the end result will be a rise in revenue for big-box retailers, due to lower debit interchange fees, at the expense of consumers who will end up paying higher bank fees of some sort or other.

  • 65oski

    I am moving my banking to a smaller, local bank where my wife has had an account for many years.  They actually know us when we walk in the door.  And they have safe deposit boxes, maybe the only reason we don’t just go online or to a credit union.

    What galls me most is that B of A feels the need to sustain the earnings they generated usng money we all loaned them a zero interest.

    I guess I view this as my small effort to make B of A small enough to fail.

  • The problem is that first these banks keep saying they have to make up for their loss but the way they acquired those revenues was down right criminal. We hear about “corporate ethics” and how we should conduct business but it appears that it is all rhetoric. I see this trend going on everywhere. Companies feel entitled to profit and revenue but you have to earn it. Make me understand why should I pay more for the exact same shabby service I have been getting for many years. It is not that they improve anything, their customer service is down right shameful and they didn’t care.

    I have no sympathy for what happened to our economy and it is a two way street. What banks did is simply called bullying and they continue to do so. It is ironic that all these “Stop Bullying” campaigns become so vocal but yet that is exactly what the big corporations are doing. They simply feel they are entitled to get all this money and when they can’t get it they extort it one way or another.

    They need to figure out how to improve their services and their customer satisfaction, then only customers may not have a problem paying more for something. I just switched from Comcast to Directv because Comcast was so outright horrible as a service and customer service. I went to Directv and paid more just so I wouldn’t give Comcast another dime, but guess what with the service I get at Directv I was so impressed that I don’t mind paying 20% more because I totally think it is worth it to me. So with that being said if they focus on giving the best product, they will come. They keep thinking about how much money to suck out of people and people refuse to be used. Hey nobody wants to be in a gold digger relationship especially when they gold digger doesn’t bring anything to the table.

  • Nlk9991

    Great piece;  I will leave my bank TD Bank  which is charging fees –