Bank of America is proposing new debit card usage fees of $5 per month to customers who hold smaller accounts according to an internal memo from the banking giant on September 29th. This new fee will discriminate between customers who hold preferred accounts, as they will not be penalized the fee to use their cards. Instead, the new fee will affect the majority of customers who simply have lower level savings and checking accounts.
Bank of America Corp. (BAC), the largest U.S. bank by assets, plans to charge customers a $5 monthly fee for making debit card purchases starting early next year, according to an internal memo sent to bank executives Thursday.
The fee will apply to customers with various checking accounts during any month they use their debit card to make a purchase. The fee will not apply to customers who do not use their debit card to make a purchase or who only use it to make ATM transactions.
The fee will apply to various consumer checking accounts but will not apply to customers in certain premium accounts, the bank’s memo said. – Dow Jones
Bank card charges and increases in fees have been a continuous topic in Congress ever since banks began to change their criteria after the credit crisis of 2008. However, this new proposal by Bank of America is one of the first to seek implementation of a fee on debt card transactions, which were created and used to help eliminate paper checks. Since the cost of eliminating most of the paper check processing has been an asset to banks through the use of electronic debit cards, this new fee has no merit outside the desire of Bank of America to seek new revenues off their customers to re-capitalize their losses from their mortgage arm, and other derivative exposures.
Lawsuits against Bank of America are rising, as the public’s perception of the financial company wanes, and this can be attested by their drop in stock price below $7 a share in recent days. The financial giant is one of many global institutions that are fighting insolvency due to the global financial crisis taking place in Europe, and has had to sell off many of their profitable arms to accrue capital.
At a time when the American people are suffering economic recession, the last thing they want is for their financial institutions to impose more fees on their accounts. If this new proposal by Bank of America comes to pass, and the majority of account holders become burdened by new fees placed on them for their debit card usage, then the results may be a move of money from the US’s largest bank to local credit unions or other banks that appreciate their business.