Wednesday, 2 November 2011

BofA Abandons Monthly Debit Card Fee Plan

Bank of America (NYSE: BAC) has finally abandoned its plan to impose a $5 debit-card fee in view of customer resentment and the decision of its rivals to move away from such a controversial step. The second-largest bank of the U.S. has had to forego earnings of between $500 million and $1.4 billion annually which would have accrued to its income by imposing the debit-card fee.

Bank of America had imposed the fee in September because the Dodd-Frank Consumer Protection Act demanded transparency in bank charges and banned certain juicy fees. Customer protests along with criticism from President Obama created uproar against BofA’s decision and its position became weaker as rival banks like Wells Fargo and JPMorgan Chase refused to impose the fee.

Nancy Bush, an analyst at SNL Financial said, “It was a reality smack in the head for these companies and in my view it was much needed.” Chief Executive of the bank, Brian T. Moynihan had defended the imposition of the fee saying that everyone realizes that the bank has a “right to make a profit.”

After widespread demonstrations and a show of resentment among the customers, the bank decided to abandon its plan. In a statement, David Darnell, co-chief operating officer at Bank of America said that the bank had listened to their customers and recognized their concerns and “as a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”

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