Published on: October 31, 2011
The Washington Post
reports that “a Facebook group has designated Nov. 5 “Bank Transfer Day,” calling on customers to move their money into credit unions to avoid soaring fees. The event has gained momentum in the blogosphere and spilled into the mainstream media, drawing attention to an often-ignored sector of the financial industry.”
The tumult is in response to the decision by Bank of America to levy $5 monthly fees on the use of debit cards to make purchases; while Bank of America has gotten most of the attention, similar decisions have been made by a number of other major banks around the country. Slate
reports that “SunTrust Bank is also planning on tacking on a $5 monthly fee on some debit-card users, Regions Financial is charging $4 a month on some accounts, and Wells Fargo is currently testing a $3 monthly fee in five states.”
The fees have been imposed by the banks because of financial reforms that were passed by the US Congress and signed by President Barack Obama, putting limits on the usurious and hidden swipe fees that were being charged by the banks on every transaction made using the cards; virtually every major retail group in the country had backed these reforms, turning back a significant lobbying effort by banks to stop any such regulation.
Meanwhile, the Wall Street Journal
reports that some banks have decided not to follow Bank of America’s lead, including U.S. Bancorp, Citigroup, PNC Financial Services and KeyCorp, among others.
And, the Washington Post
writes that at the Lafayette Federal Credit Union in Kensington, Maryland, there has been a specific effort to market against the decision to levy monthly fees on the use of debit cards to make purchases.
According to the story, “The credit union placed ads in area newspapers telling consumers: ‘There’s no reason to pay your bank, when we’re here to pay you, with: no fee checking and debit card, no minimum balance requirements . . . dividends paid quarterly’.”
goes on: “Credit unions have the upper hand now because they and community banks with less than $10 billion in assets are exempt from a new government regulation that cut interchange or ‘swipe’ fees, rules that banks say triggered the wave of new fees.
“Still, credit unions are not without their own limitations. Lafayette’s Madaras still finds herself explaining to people that, unlike a bank, a credit union is a cooperative, where customers are members. That means profits made on loan interest income and fees are returned to members as higher savings and lower loan rates. It also means that the institutions are often smaller than banks and lack extensive networks of ATMs and branches.”
also writes: “In the past month, the National Association of Federal Credit Unions recorded a 350 percent increase in Web traffic to its online credit union locator, CUlookup.com. The portal matches visitors with institutions they might be eligible to join based on affiliations, such as school, employer or church.”
Meanwhile, the Los Angeles Times
reports that even Bank of America is looking to assuage irritated customers, saying that the bank “is likely to allow customers to sidestep the fee if they use BofA credit cards in addition to debit cards, have certain direct deposits or maintain a minimum balance, said the person, who was not authorized to speak publicly. BofA previously said it would waive the fee only if a customer had a mortgage or $20,000 in accounts at the bank and its Merrill Lynch brokerage.”
According to the story, “Bank of America Chief Executive Brian T. Moynihan said this week that he was ‘incensed’ by public criticism of his company. He told employees to push back by reminding local leaders of BofA's contributions to their economies.”