On Tuesday, Bank of America joined other major U.S. banks in cancelling fees associated with the use of debit cards.
Back on September 29th, Bank of America had announced a plan to charge a $5 monthly fee to customers who use BoA debit cards for purchases. This announcement caused outrage among Bank of America customers and spurred other banks – including JPMorgan Chase, Wells Fargo, SunTrust Banks Inc. and Regions Financial Corp. – to cancel their own debit card fees. But this latest “elimination” of debit card fees by major banks is only a clever ruse to camouflage charges that will continue to exist, in order to drive debit card users toward their credit card. Because many people dislike spending money on fees and charges related to simply getting their own money out of the bank, debit card users will turn to other payment methods, such as credit cards, to make their purchases. This turn towards credit cards is more profitable to bankers in that credit cards force customers to spend more than they would otherwise. This common practice is essentially a way of stealing money from customers in order to improve the bank’s bottom line.
The cancellation of debit card fees by many of the major banks is nothing but a ploy to stave off consumer outrage (such as “Bank Transfer Day”). According, to the New York Times, “Bank of America still plans to roll out a new menu of checking accounts with fees ranging from $6 a month to $25 a month sometime next year,” meaning that the fee is no longer tied to the debit card, but to the account itself. These hidden fees tied to the debt cards and checking accounts are not characteristic solely of Bank of America’s policies: Wells Fargo also claims to have axed debit card fees, but monthly maintenance charges are still attached to most checking accounts.
The past week’s hotly debated debit card fees are just the latest in a growing list of charges being levied in order to force people to reach for their credit cards. A study performed by Bankrate.com found that in the last year overdraft fees and the average cost of using an ATM have risen from $30.47 to $30.83 and from $3.74 to $3.81, respectively. The increased cost of getting their own money out of the bank is driving some customers towards other methods of payment. A poll done this summer by the AP-GfK discovered that 75% of people use their debit cards more often than their credit cards. If faced with a $3 debit card fee, the poll found that 61% would find an alternate payment method. This fact cannot be news to the major banks of Wall Street, banks that have enormous credit card portfolios. JPMorgan Chase alone has had $911 million in profit in their credit card division in the first half of 2011, according to Bloomberg. JPMorgan Chase and other banks are pushing for their customers to use credit cards because credit cards are tied to higher profits, due to charges, such as interest.
Over the past few years, America’s biggest banks have been increasing fees in order to raise their profits. The use of credit cards comes with the disclosed fees, such as international fees or interest, and these fees are the reason that many people prefer to use money they already possess: money that is supposedly theirs, fee-free. Major banks are using all the techniques in their power in order to make our money essentially not ours and encourage us to use different methods of payment – like credit cards – that will make them more money. However, as demonstrated in the past two weeks, the public does have power over their financial institutions and should continue to exercise their power in order to improve bank services and respect for their clients. Banks are still businesses that are, at least to some degree, forced to abide to their customers’ wishes or face bankruptcy.
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