Bank of America forcing customers to pay bank fees
Regular bank fees might be good news for online banks, but what about those of us that want a physical place to go and get money? Not too long ago the BQB published an article about a rise in bank fees for debit card usage, Wells Fargo to be exact. Since reporting on the bank fees Wells Fargo was placing on their customers, Bank of America (BAC) has issued a $5 monthly debit card fee to begin in early 2012. Customers as a result, were not happy to say the least that they would now be incurring regular bank fees on top of other unneeded expenses.
Bank of America CEO Brian Moynihan has said his bank’s new $5 fee debit card fee is justified because the bank “has a right to make a profit,” according to CNN Money.
Hey Brian, umm—that line isn’t going to help the bank’s image. Didn’t we bail you out already via taxes? Now you want to charge us regular bank fees? Online banks get ready for business!
Bank of America isn’t the only bank to enrage customers with regular bank fees. In a recent mailing to its customers Citibank said it would double the monthly service charge on EZ Checking accounts from $7.50 to $15, in November.
According to DailyFinance, for the first time since 1995, the number of branch storefronts in the United States dropped last year, according to the American Bankers Association. A recent ABA survey showed that 62% of banking customers prefer online transactions– a huge increase from the 32% who felt that way in 2009.
With customers becoming more comfortable banking online (you can deposit checks with your smartphone using an app etc.) online banks such as ING Direct and PerkStreet are becoming more attractive—ESPECIALLY since brick and mortar banks like BAC are gaining bad press due to the extra fees.
The online banks are seeing a spike in members as customers realize the benefits (and no bank fees) that these institutions boast. Some of these banks, such as ING Direct, not only offer free checking accounts but also offer interest (.24% on accounts up to $49,999.99).
Now, of course online does have its disadvantages. When you go to your local bank, you likely know the bankers or the managers that work there and it feels somewhat personalized. On the other hand, online banks are trying hard to overcome the obvious difficulties of an online-only presence.
ING Direct has a toll free number for those who wish to speak with a real person; customers have access to over 35,000 ATMs, free online bill pay, and a free MasterCard debit card for purchases.
PerkStreet, which launched in 2009, has a no-fee checking account which is free to open with a $25 minimum and earns debit-card rewards, including free coffee, music or cash.
“The Bank of America news woke everyone up and spurred change,” said Perk Street’s CEO Dan O’Malley in a phone interview with DailyFinance. They claim that the news of BAC and other banks charging more bank fees have been very good for PerkStreet.
Should you get an online bank account to avoid paying regular bank fees?
In order to see if these new types of banks are for you, consider your options and read up on what they offer. If I had to spend $5 per month just to use my debit card, I would at least research these companies and then decide if the trade-off in format was worth it. Those who do much of their banking online anyway should definitely look into it since, well, it is an easy way to stick it to the man (AKA the CEOs of banks that are charging annoying fees)!
You want to anger those rich executives? Perhaps send your banking business elsewhere.
- Bank of America competitors promote free debit cards (stiel.wordpress.com)
- How Much Do New Fees Help Banks’ Revenue? (BAC, C) (businessinsider.com)
- Debit Card Fees Are Robbery – NYTimes.com (mbcalyn.wordpress.com)