This announcement attracted the attention of Occupy Wall Street, Congress members and even of the President of the United States.
Bank of America was under pressure to make the change as rivals backtracked from plans to charge customers for using their debit cards. The bank explained that this decision was made in response to customer feedback and competition.
Chase, Wells Fargo, Regions and SunTrust previously announced last week that they would remove their fees. And Bank of America followed this example, announcing that it will also abandon the proposed fee.
“For a lot of consumers, this was the last straw,” said Jean Ann Fox, director of financial services for the Consumer Federation of America. “Banks have been making a lot of changes to accounts, adding fees and raising the minimum balance needed, and consumers were clear that they objected to one more fee.”
David Darnell, the bank’s co-chief operating officer, said, “We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee.”
About 300,000 people signed an online petition asking the bank to renounce the fee. Peter Welch, a reporter, called for a Justice Department investigation and Senator Dick Durbin appealed to Bank of America customers, “vote with your feet. Get the heck out of that bank.” President Obama said the move was “not [a] good business practice.”
Consumer advocates described the decision as “a victory for the little guy”. Pedro Morillas, legislative director for California Public Interest Research Group said, “Bank of America didn’t cancel the fee because they wanted to. They canceled the fee because consumers voted with their feet and expressed their displeasure by taking their money and moving it.”
Morillas added, “Now consumers really know there are better choices out there, like credit unions and community banks that, from our research, essentially charge fewer fees and are better for consumers.”
Bank of America fell 6.3 percent to close at $6.40 in New York. The shares have dropped 52 percent this year, the worst performance in the Dow Jones Industrial Average and the 24-company KBW Bank Index.
Some of the largest chain stores backed the cap, and the Arlington, Va.-based, Retail Industry Leaders Association said in a statement that the trade group plans to push for similar relief on credit cards.
“This is what the movement would consider a very, very small first step on rectifying an oppressive dynamic between the financial services industry and the 99 percent,” announced Ed Needham, the Occupy Wall Street movement’s spokesman.
If banks do end the fee, falling consumer interest in the Bank Transfer Day campaign, which encourages people to close their accounts at big banks and move their money to credit unions.
Morillas said the financial regulatory reform finally had worked: “Banks were forced to disclose their fees to consumers, and not hide them in places like swipe fees. And now consumers are able to make a real choice about exactly what they’re paying for and exactly what they’re getting for their money.” [Via Reuters]