Bank of America rescinded their debit card fee this week, but that won’t stop me from leaving them.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.