Wells Fargo and Chase drop debit card fees
Numerous large retail banks have announced in the past year that they will be adding new debit card or checking account fees, which has not gone over well. The consumer backlash has caused some of the largest banks to backtrack, and JPMorgan Chase and Wells Fargo have canceled their planned fee hikes.
Big banks flinch
The Dodd-Frank Act mandated a cap on how much banks can charge merchants when customers use debit cards, which took effect on Oct. 1, according to the Wall Street Journal. Swipe fees were capped by the Federal Reserve at $0.21 per transaction from the previous average of $0.44, which will take a toll on the bottom line of a several retail banking companies. It’s estimated to cost the banking industry at least $6 billion per year.
To make up lost profits, banks started testing out monthly debit card fees. Bank of America announced a $5 monthly fee for debit card users. Other banks started testing fees in various markets and consumers were vocal about their displeasure. Some started moving their business to credit unions. In order to quell a consumer uprising, several large banks are curtailing fledgling fee programs.
Alls well that ends Wells card fee
According to USA Today, both JPMorgan Chase and Wells Fargo have announced they are not planning on extending their debit card fee pilot programs.
Wells Fargo had not begun charging customers a fee yet, but had only announced that it was going to test a monthly debit card fee in five states. According to Bloomberg, the plan was to charge customers in Nevada, Georgia, New Mexico, Oregon and Washington state $3 per month to use a Wells Fargo debit card beginning Nov. 15. However, the company has scrapped the program before it began and stated they will “continue to stay attuned to what our customers want.”
Morgan will not chase fee revenues
JPMorgan Chase has pulled the plug on its debit card fee pilot program that began earlier this year. Chase started charging customers in Georgia and Wisconsin a $3 per month fee for using their debit cards in February. However, the fee pilot program is going to be allowed to lapse when it comes to an end in November. According to Moneywatch, the bank isn’t officially announcing it, but appears to be allowing the program to wither on the vine.
B of A will steadfastly charge fee
Bank of America, the bank that started the deluge of debit card fees by announcing a $5 monthly debit card fee, has steadfastly refused to cancel its plans to start charging its customers. The bank was excoriated by the president of the United States himself, but according to Moneywatch, B of A is likely to give customers ways around the fees, such as waiving the fee if a customer receives direct deposit.