Bank of America to Introduce Debit Card Fee

bank of america debit card feesWell, it looks like it has begun. One of the nation's largest banks, Bank of America, has announced they will begin charging customers for debit card usage. This new fee is set to take effect at the beginning of next year and impacts all customers regardless of how they use their debit card. If you use your debit card at all during the month you will be assessed this fee, whether it is 1 or 200 times. If you use your debit card just for transactions at the ATM you will not be assessed the monthly service fee.

According to rumors, for those with certain relationships with Bank of America (NYSE:BAC), they will be able to avoid the fee. These relationships typically consist of deposit amounts or lines of credit (auto loans, personal loans, etc) with the financial institution. 

Does this really make sense for Bank of America?

In such a time of turmoil for the bank, does it make sense that they would begin to charge their customers for using something like their debit card? I don't know about you, but I use my debit card religiously and I wouldn't be very pleased if my bank, luckily not BOA, did something like this to its customers. 

In some aspects it does make sense for the bank, let's face it, they are their to earn a profit. Recent legislation, specifically the Durbin Amendment to the Dodd-Frank financial reform bill, will now limit the amount the financial institution can charge its customers. For Bank of America, this an attempt to recover those losses.

Did we learn anything from Netflix?

Interestingly enough this move seems quite nostalgic. Netflix recently raised the price of its service significantly spawning an exodus of subscribers from Netflix. I speculate that in the next 6 - 12 months BofA will begin to see a decline in the amount of it's personal banking customers. This will certainly open opportunities for other banks that drive on the principal of "free" or "convenient banking". 

Has Bank of America lost its luster?

I remember in the late 90's and early 00's when Bank of America was a pioneering bank. They had the latest product offerings and were leading the way with technology and convenience. (can anyone say online bill pay?). People were proud to say they banked with Bank of America and it was one of the premier banks.

Fast forward 10 years... Bank of America has had some rough spots with the mortgage collapse and government infusion. However, it seems to keep getting worse. With moves like this Bank of America is quickly turning off new customers to their services to please shareholders (and to be quite honest, there's not much of that going on now). 

We shall see how the "Debit Card Fiasco of 2012" plays out but I can assure you that not many customers are looking on this favorably. However, other banks may be looking at this as an opportunity to win over some customers from Bank of America. I'm going to keep an eye on JP Morgan (NYSE:JPM) and see how they react to this move. My guess is it will turn out nicely for them.