Banks to Abandon Fees in Response to Backlash UPDATED

At the beginning of this year, news outlets warned customers that free checking would slowly but surely become extinct. While some smaller/regional banks may have already started their debit fees, national banks had yet to respond until about a month ago. At that time, Bank of America announced that they would charge a debit fee to all customers whom used their bankcard for debit/credit transactions. As one of the biggest national banks, the announcement drew a lot of criticism.

The reaction to the announcement has been swift and angry. Last week, NBC nightly news reported credit unions have seen increases in new accounts, many of those new customers were angry about their previous bank fees. This should come as no surprise as the best way for customers to show their anger is to take their business elsewhere (as Netflix recently experienced). Banks are also responding to backlash – some are doing away with bank fees.

“SunTrust, Regions latest banks to retreat on debit fees” by Jason Kessler of CNNMoney.com reports the two banks mentioned in the title would stop charging monthly debit fees and “both banks said they will refund any customers previously charged fee”. The irony is both are responding to criticism mostly aimed at Bank of America, but nevertheless a bank debit fee is a fee regardless of whether it’s from Bank of America or regional known banks.  JPMorganChase and Wells Fargo have responded by abandoning plans to charge fees.

Now, the pressure is on Bank of America to see whether they will also forgo their fee plan.  So far, the update is they are “considering proposals that would allow customers to avoid them, according to a person familiar with the bank’s plans.”


Update 11/1/11 12:50pm


According to NYTimes.com's "Bank of America Nixes $5 Debit Card Fee", Bank of America "said Tuesday that the decision to scrap the plan came after listening to customer feedback in recent weeks". Although, the article mentions the bank will be introducing non-fee checking accounts in a pilot program in a few states. Bank of America's decision shows that the bank has the sense to understand that they are are dependent on their customers. Nothing bothers me more than a service-based company that makes major decisions disregarding customer sentiment. In a service-based company, the customer is the business, it is always possible to piss them off enough to inspire an exodus.