Democrats are encouraging Bank of America customers to switch banks instead of paying its new $5 monthly debit card fee, however, other major U.S. banks are also considering implementing similar fees.
When Bank of America recently announced that it will implement a $5 monthly debit card fee as early as 2012, it received an abundance of negative press and was harshly criticized by the most powerful Democrats.
Sen. Dick Durbin (D-Ill.) recently told the bank’s customers to “vote with their feet” by switching banks. It is unclear if there are better larger banking options as several major banks have started testing new fees in order to make up for Durbin’s new rule that cut their interchange revenue in half, SFGate.com reports.
Wells Fargo & Co. will soon begin testing a $3 per month debit card activity fee in selected states while JPMorgan Chase has already been testing a $3 monthly debit card fee in Wisconsin.
SunTrust as well as Regions Financial Corp. are adding $4 to $5 charges as well, according to SFGate.com.
"This is one of the unintended consequences of Dodd-Frank," Joe Morford, a banking analyst at RBC Capital Markets in San Francisco, said, SFGate.com reports. “There are other provisions in the bill, like limiting charges on overdrafts. Fees are under attack from all quarters, they're being required to raise capital levels and the economy is sluggish."
According to Morford, banks are losing revenue but are still expected to cover the costs of maintaining large networks of branches and ATMS in addition to new mobile banking options.
“Customers keep wanting greater convenience, but it costs money to provide all these things," Morford said, according to SFGate.com.