Bank of America Cancels Debit Card Fee Plan Amid Outrage

Strategic Insights -

Bank of America, the second-largest US bank by assets, has scrapped plans to charge customers a $5 monthly fee for debit card purchases, reversing a decision made just a week ago. The move follows a wave of consumer backlash and a campaign to switch to community banks and credit unions. JPMorgan Chase and Wells Fargo, two other major banks, had also announced plans to drop similar pilot programs. Meanwhile, financial markets were hit by concerns over the European debt crisis, with Bank of America's shares falling 6% in a sharp market decline. The bank's decision to cancel the fee plan comes as it faces increased regulatory scrutiny and pressure to boost revenue amidst mortgage-related losses and claims.

Key Takeaways:

  • Bank of America canceled plans to charge customers a $5 monthly fee for debit card purchases due to "customer feedback and the changing competitive marketplace."
  • JPMorgan Chase and Wells Fargo also dropped their pilot programs for similar fees.
  • SunTrust Banks and Regions Financial have killed their debit card fees as well.
  • The bank faces concerns over its ability to cover mortgage-related losses and claims, and may remain under pressure to grow revenue in new ways.
  • Bank of America plans to lay off 30,000 workers as part of a push to cut $5 billion in annual costs.
  • The bank has been selling off assets to reduce costs.
  • Consumer backlash and a campaign to switch to community banks and credit unions contributed to the bank's decision to cancel the fee plan.

Statistics:

  • 6%: Bank of America's share price decline due to concerns over the European debt crisis.
  • $5 billion: The annual cost savings Bank of America aims to achieve through layoffs and asset sales.
  • 30,000: The number of workers Bank of America plans to lay off to reduce costs.
  • Late September: When Bank of America announced its plan to start charging a $5 monthly debit card fee.
  • A week ago: When JPMorgan Chase and Wells Fargo announced plans to drop their pilot programs for similar fees.

Sources:

  • [Bank of America statement]
  • Investor's Business Daily (citing a Bank of America statement)
  • JPMorgan Chase announcement
  • Wells Fargo announcement
  • SunTrust Banks announcement
  • Regions Financial announcement