Banks began crafting the monthly debit card 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 firestorm of criticism from consumers and politicians.Kevork Djansezian/Getty Images
Bank of America Corp. is dropping plans to charge a $5 (U.S.) monthly fee for debit card use, the bank said Tuesday in a statement.
The second-biggest U.S. bank said the move was in response to customer feedback and competition. Bank of America was under pressure to make the change as rivals backtracked from plans to charge customers for using their debit cards.
"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," David Darnell, the bank's co-chief operating officer, said in a statement.
JPMorgan Chase & Co. and Wells Fargo & Co. last week decided to cancel test programs, while SunTrust Banks Inc. and Regions Financial Corp. said Monday 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 firestorm of criticism from consumers and politicians, and many smaller banks and credit unions shunned the practice.
Bank of America began softening its stance on the fee last week. The Charlotte, N.C.-based bank 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.
The reversal is another embarrassing about-face for Bank of America chief executive officer Brian Moynihan. This spring, he signalled plans for a modest dividend increase this year, only to have the U.S. Federal Reserve Board deny the request.