Bank of America recently announced that it will institute a $5 monthly fee to customers who make purchases with their debit cards. George Stephanopoulos of ABC News put this question to President Obama – can you stop the fees? The President didn’t answer with an absolute. Instead, he remarked that customers should be treated fairly and hoped that banks would come to the conclusion that raising consumer fees is ultimately bad business practice.
At the heart of the issue is the question of whether banks are seeking to cover expenses or to generate additional income from consumers? Norma Garcia, manager of Consumers Union’s financial services program, believes that the $5 fee is a means for banks to collect more. She says that banks collect enough from retailers to cover the costs of debit card transactions.
But a spokeswoman for Bank of America counters Garcia’s sentiment, noting that the costs associated with offering debit cards have changed as a result of a declining stock price and bad mortgages inherited from Countrywide. Premium account holders and clients with Wealth Management/Merrill Lynch and US Trust will be exempt from the $5 monthly fee. As of now, it remains unclear whether other financial institutions will follow Bank of America’s lead.