|Occupy K Street demonstrators protest outside the Bank of America building on a street in Washington [Reuters]|
Bank of America has dropped plans to charge a $5 per-month debit fee, handing a victory to consumers angry with big banks.
The second-biggest US bank, whose shares were down almost six per cent, said on Tuesday that the move was in response to customer feedback and competition.
The bank was under pressure to make the change as rivals backtracked from plans to charge customers for using their debit cards.
“It’s a sign of consumer power in action,” Norma Garcia, manager of the financial services programme for Consumers Union, said. “This is a sign of the marketplace working.”
Last week JPMorgan Chase and Wells Fargo decided to cancel test programmes, while SunTrust Banks Inc and Regions Financial Corp said on Monday that they would end monthly charges and reimburse customers.
Bank of America had planned to start charging customers next year. Banks began crafting the monthly charges to make up revenue lost to a law that slashes the fees they charge retailers when consumers swipe their cards.
The fees sparked a storm of criticism from consumers and politicians, and many smaller banks and credit unions shunned the practice.
Bank of America, based in Charlotte, North Carolina, began softening its stance on the fee last week and had planned to give customers more ways to avoid the charge, such as maintaining minimum balances, having a paycheque direct-deposited or using their Bank of America credit card.
“We have listened to our customers very closely over the last few weeks and recognise their concern with our proposed debit usage fee,” David Darnell, Bank of America’s co-chief operating officer, said in a statement.
The reversal is another embarrassing about-face for Bank of America’s chief executive officer, Brian Moynihan.
Last spring, he announced plans for a modest dividend increase this year, only to have the Federal Reserve Board deny the request.