Consumers Union Urges Bank Of America CEO To Drop Debit Card Fee

Two weeks after asking regulators to investigate Bank of America’s plan to charge some customers a $5 fee to make purchases with their debit cards, our cousins at Consumers Union have taken their case directly to the bank’s CEO.

In a letter sent yesterday to BofA CEO Brian Moynihan, Consumers Union writes:

Recent news accounts have indicated that Bank of America will begin charging many of its checking account customers a $5 monthly fee for debit card purchases starting in 2012. This fee will be charged even when consumers use the card only once in that month. Consumers Union, the public policy and advocacy division of Consumer Reports believes your decision to charge consumers a new monthly fee to use their own money for debit card transactions is both ill-timed and unfair. Accordingly, on behalf of America’s financial services consumers, we urge you to withdraw these plans immediately.

Consumers should not be required to pay a costly fee that appears to be arbitrary and designed to generate income to make up for Bank of America’s bad business decisions rather than covering the costs of providing debit card services. Banks can still collect approximately 24 cents from retailers every time a customer makes a debit card purchase. That’s much more than the median 8 cents the Federal Reserve estimates it costs a bank to process a debit purchase when consumers use a PIN number.

Bank of America plans to take dollars from consumers it says it lost when the Federal Reserve decided that banks could not charge retailers high and anticompetitive debit interchange fees to process debit card transactions. Not only is Bank of America trying to make up for ill-gotten profits by heaping a new fee on consumers, it is doing so even though Bank of America actually saves money when consumers rely more on debit cards instead of paper checks, which are more costly to process.

The public wants to know why it is that you plan to charge your customers $5 monthly, or $60 per year, more to access their own money, especially when taxpayers rescued Bank of America with a $45 billion loan just a few years ago. It seems unjust and indefensible for Bank of America to now levy a costly new fee on consumers in a struggling economy, especially when the fee is not related to the cost of providing the service. This fee is especially egregious, imposed as it is during a weak economy, when many consumers are struggling to keep afloat.

Two weeks ago, Consumers Union urged Congress and Federal regulators to investigate Bank of America’s controversial new fee. We also gave consumers an opportunity to tell members of Congress what they think about the new fee. Within 24 hours of sending out our e-mail action alert, nearly 40,000 consumers heeded our call and sent a message to their representative calling for an investigation. We hope Congress and Federal regulators will get to the bottom of this unfair debit card fee. But Bank of America need not wait until an investigation is underway to reverse its plans. Consumers Union urges you to act now to do what is right and to do what is responsible–immediately withdraw your plans to charge checking account customers $5 to use their debit card for purchases.

Make no mistake about it. American consumers are outraged by Bank of America’s ploy to convince the public that this fee is necessary because of new regulations. Now that banks must disclose all their fees up front, consumers can objectively decide for themselves whether you are telling the truth and we are hearing that consumers do not like what they see. One consumer we heard from said it best: “I am tired of the banks and other financial institutions trying to collect more than their fair share.” We couldn’t agree more. We urge you to reverse your decision to impose a $5 monthly fee on your debit card customers. Consumers will thank you for it.

Please respond to our letter by Wednesday, November 2, 2011 to advise us of your position.

In addition to its plea to Bank of America, Consumers Union has called on other banks that are launching or testing similar fees — SunTrust, Wells Fargo, Chase — to rethink their plans.

“Americans are tired of being hit with new banking fees, especially since they’ve already paid to rescue firms like Bank of America, whose behavior helped spark the economic meltdown,” said Norma Garcia, director of Consumers Union’s financial services program. “This debit card fee just adds insult to injury. It’s unfair for the banks to stick consumers with a monthly fee just to use their own money. Bank of America and other banks can still collect enough money from retailers to cover debit card costs.”

Garcia added, “If Bank of America and the other banks refuse to drop the debit card fee, consumers should consider dropping them. There are plenty of banks and credit unions that don’t charge debit card fees that will be more than happy to accept new customers.”

Consumers Union has published a set of tips [PDF] for consumers who want switch banks.


Edit Your Comment

  1. Mr. Fix-It says: "Canadian Bacon is best bacon!" says:

    Later, BoA’s CEO was quoted as saying: “lol u mad?”

  2. Wasp is like Requiem for a Dream without the cheery bits says:

    While I apprciate this statement why is no one saying anything about Citi’s $15+ increase?

    • deathbecomesme says:

      Because BoAsshats was first in the news. You know the media has a narrow line of site.

    • coopjust says:

      Basic checking fee on Citibank can have the fee avoided with a direct deposit and an automated bill payment (which a lot of people have both of already).

      BofA is hitting anyone who uses a debit card that doesn’t have a Premium/Platinum account ($20k/$50k) with the $5 fee. More people will get hit with the debit card thing than the fees on the checking, most employers offer direct deposit nowadays.

      BofA is also bigger than Citi, although it’s not by much.

      • GrayMatter says:

        “BofA is also bigger than Citi, although it’s not by much”

        And, the way they are going, it will be an even smaller amount; perhaps no longer bigger.

  3. farker22 says:

    that’s why provisions should have been made in order to be eligible for bailout money – instead of being rush by the banks and just give them the money at very low to no interest rate.

  4. ninjustin says:

    The CEO saying that “We have a right to make a profit” shows how little they actually care about their customers from the top down. By nickle and dime-ing their customers when they are already making a profit is just bad business. I’ve already set up a new bank account and plan on switching at the end of the month. I don’t care if they drop their plans to add a debit card fee.

    • coopjust says:

      Agree completely. I think people who use the debit card a lot that would still generate worthwhile swipe fees are going to leave en masse, there are much better alternatives out there that don’t treat you like you are a cow to be milked.

    • sirwired says:

      Yes, BofA makes a profit. You are proceeding on the assumption that BofA actually wants you as a customer. But do you, personally, make a profit for BofA? The interest they are collecting on the money in your account is puny. There are very real, non-zero, administrative costs associated with maintaining an account. If you are currently a net loss for BofA, how is it “bad business” to drive you away via a fee?

      Just because BofA currently makes a net profit does not obligate them to take continuing losses in other areas of their business.

      • humphrmi says:

        If the cost of maintaining the account is higher than what they charge, then they should increase the maintenance fees. Charging a fee to access your money is basicaly saying “Your account costs us too much to maintain, so we’re going to charge you when you take your money out.” They’ve got it backwards. This is about fee transparency; if a fair price to maintain a puny account is $15 / mo, then charge that for puny accounts… not a charge to actually access your money.

        Everyone knocks Citibank, but at least they are being transparent. “Hey, have $15K with us? Or $15K in a mortgage with us? Great, we’re making a profit off you, no monthly fees and no debit card fees.” If you have a smaller account with them, they charge you monthly maintenance fees. They’ve basically promised to never implement a debit card fee. They’re out in front of this one. BofA isn’t.

        • sirwired says:

          They aren’t trying to charge you to access your money. They are charging you a fee to carry a debit card. There are plenty of ways to get at your hard-earned cash other than a debit card, all of which are free. BofA ATM’s, ATM cards, on-line bill pay, and actual checks.

          I have no debit card and have no issues getting my money from my bank.

          • smo0 says:

            You seem to forget that these banks were the ones that encourage any business, who took checks before, to not accept them now.
            For the last 20 years, that’s all it has been.
            These people PUSHED the consumers AND merchants as a whole to use debit cards for purchases.
            People are to the point where they don’t feel safe carrying cash.

            Think about it – wallet gets stolen? Great, cancel your cards and protect that 200 in your bank account.
            Withdraw 200 dollars cash because you’re avoiding a fee… wallet gets stolen?
            You’re out 200 dollars.

            This was the propaganda drilled in for nearly two decades – and now they are voiding it out, complaining that – wah wah it costs them too much money…

            IT WAS THEIR



      • Such an Interesting Monster says:

        Which is why I’ll do everything in my power to avoid having to pay fees on my BoA checking account. Just to ensure my account costs them money every single month. It’s my own little F-U to them.

      • RvLeshrac says:

        BoA doesn’t just make a profit on lending your money. Each time you use your debit card, they make money off that swipe.

  5. speedwell (propagandist and secular snarkist) says:

    That’s great, but I am still not switching back.

  6. kella says:

    “It seems unjust and indefensible for Bank of America to now levy a costly new fee…”

    It’s indefensible that people continue to keep their money at Bank of America.

    • Actionable Mango says:

      Exactly. There is plenty of competition. Just leave BoA.

      • RvLeshrac says:

        Really? Because it looks to me like a lot of community banks and non-military, non-emploees-only credit unions in my state have instituted the same sets of fees.

        The ones that haven’t are basically unusable, since they all close at 4:00 and don’t have free ATMs anywhere. I’d be paying more in gas and ATM fees than I would even if I was banking with Citi.

        I guess that leaves Ally, but I’m not entirely sure I want to bank with GMAC.

  7. StB says:

    “Consumers should not be required to pay a costly fee that appears to be arbitrary and designed to generate income ” Arbitrary? Is the Consumers Union not aware that this is in direct response to Dick Durbin limiting swipe charges?

    • Greg Ohio says:

      They are well aware that this is a response to the “swipe fee” limitation. Did you read the story? It notes that the newly-limited fee is still three times the actual cost of processing the transaction.

      • jeb says:

        According to who? And what all does that actually include? Just the cost of maintaining the back-end computer equipment? The cost of issuing the card? The fact that computers need to be replaced on occasion? The cost of fraud protection?

        There’s more to the cost of processing a transaction than just the nominal cost of taking the transaction from the POS terminal to your bank’s back end system.

        • Peggee is deeply offended by impetulant, pernicious little snots disrespecting her and violating her personal space at Best Buy. says:


          And it’s according to analysts who know a whole lot more about finance than you do, so just sit down.

          • Greg Ohio says:

            It’s according to the Federal Reserve. That 8 cents is primarily for the people and equipment: that amount of data would cost next to nothing.

  8. jeb says:

    Actually, this is a plenty fair move on BoA’s part. If you want free access to your money, keep it yourself.

    A debit card is not a “right”. There is a value to having a debit card, even to the consumer. If it saves money for the bank, good for them, but they can charge for having one. If you think it’s too expensive, switch banks. If they’re all charging for it and you still think it’s too expensive, start your own bank and don’t charge a fee for a debit card.

    A bank’s (or any for-profit institution’s) sole goal is to make as much profit as possible for the company’s shareholders. In order to do that, though, they need to provide value to customers, otherwise they’ll leave. The market will still work here, assuming that the government won’t prop up BoA again if it goes under.

    • crispyduck13 says:

      They already collect fees from the merchants who accept the debit cards as form of payment. So this $5 fee is really just to get it on both ends. Did you really think banks started issuing debit cards at some loss to themselves? Hell no, it’s much cheaper for them to process a debit card transaction than to clear a check and on top of that they get to charge the merchants a nifty little fee every time they accept a swipe.

      So your argument is null as they are have been making a tidy profit on debit card use for years, it’s just now they’ve decided they want more.

      • jjonathany says:

        I don’t know. Consumers Union makes a very good argument for why this is a stupid and arrogantly greedy move by BoA. I agree with everything they wrote. But, even though the fee is designed to sidestep regulation, I see validity in jeb’s argument that the fee is (in a sense) fair, and what wasn’t fair was BoA getting bailed out in the first place.

      • jeb says:

        Why is it nullified? Remember, BoA wants to make as much profit as it can: if customers will pay $5/month for a debit card, then they should charge $5/month for the debit card. Let the free market hash this out; after all, there’s not only banks, but credit unions, most of which are truly not-for-profit (though they all claim to be.) Not to mention many banks and credit unions are using free debit cards as a competitive advantage (since they lack some of the other benefits of BoA, such as a huge nationwide network of branches.)

        • PunditGuy says:

          I’m not a big believer in the Market as an agent of positive change — but I think you’re right in this case. BoA is charging a fee that they figure will be an annoyance to customers but won’t be sufficient to make all of them switch to other banks. The way to solve this is for a larger chunk of those customers to move their money than was expected. The more significant that chunk, the better.

    • Madman says:

      Jeb, You are absolutely right. If people don’t like the fee bank elsewhere – no one says you have to stay with BoA.

      The notion that banking should be free is pervasive and the bank’s really only have themselves to blame, but it’s a business and they should be able to charge for their services.

      At least now the charge is transparent to the consumer whereas before it was hidden in higher prices.

      • RvLeshrac says:

        What in the hell?

        Banking isn’t free. It has never been free.

        The bank makes a metric fuckton of money off your deposits. In addition to the interest they collect from loans, they collect money from the Fed just for holding money. They collect money each time you use your debit or credit card. They collect money from the advertising they bombard you with when you attempt to use online banking. They collect overdraft fees which are often the equivalent of 1000%+ interest rates. They collect fees associated with automatic-savings programs, retirement and mutual-fund accounts, “identity protection” services, rewards card memberships, the list goes on and on.

        Bank of America just reported earnings of $6bn. That doesn’t sound like they’re hurting for cash.

  9. sirwired says:

    I think that the fee is high, but I don’t totally understand the outrage.

    This is healthy capitalism at work; there are very few people that cannot simply move their business elsewhere. If you don’t like the fee, move. If it’s too much trouble or expense to move, BofA is simply reaping the benefit of having you as a committed customer; it’s not like they charge you directly to move.

    Unlike the merchants, which were essentially being held over a barrel by Visa/MC prior to the debit fee changes, consumers have bountiful choice when it comes to retail banking.

    • crispyduck13 says:

      I agree with you 100%, I don’t understand the point of this letter. No one has a gun to anyone’s head about where to bank. If consumers want to send a clear message to BOA and the other large banks who are considering this fee, all they have to do is say no in the clearest way possible.

      • FyreGoddess says:

        I suspect that when (if?) BoA responds with a statement that they have no intention of removing this fee, the consumers union will officially back the “Move your Money” day on November 4 (turns out the 5th is a Saturday and not a good day to attempt to do your banking).

    • Markitect says:

      +1. You’ve totally nailed it. Excellent comment.

    • bjcolby15 says:

      Agree 100%.

      I think of the $5 a month fee as this: compared to a credit card, which can carry an interest rate of 29.99% (or more), $5 is a huge bargain if you know enough to use your card frequently – or even if you don’t reach the $20K/$50K levels to avoid the fee, you have enough in the account(s) to have it not hurt as much as the fee would with little money. $60 a year with just $100 in the account hits worse than $60 a year with $10,000.

      But sirwired is correct – if you don’t like the $5 fee, there are plenty of banks that will be glad to take your business, with one huge caveat: if you don’t do the research, even the best of the best credit union/small bank can shock you with even worse fees or even higher balance requirements than BofA can conjure up on their worst day.

      tl;dr: move your money, but don’t be foolish doing it.

  10. Herbz says:

    Should introduce regulation into the banking industry that banks are at max allowed to make % profit off of a single product annually, with the exception of punitive fees. [and make it so punitive fees can only be charged at max once a month, not after every transaction].

    They should also have to provide evidence for the amount they are charging, proving that it is fair and that they make X% profit off of it.

    • Bsamm09 says:

      So what happens when they make that profit allotment? Should they stop offering the service at that point? Also, does this new profit take into account all of the new compliance required to report how much profit they made? What amount of indirect costs are going to be allotted to each service and what is the cost drivers associated with these indirect costs?

      • PHRoG says:

        It’s a bank. I’m pretty confident they have the skill required to fluff those numbers as much as possible. ;)

    • Markitect says:

      You realize regulations cost money to implement and prove compliance, right? How much do you want to spend on banking fees to pay for compliance with regulations?

  11. LadySiren is murdering her kids with HFCS and processed cheese says:

    Most recent bank profit reports:

    B of A: $6.2B (via Houston Chron at
    Citibank: Earnings up 74% (via AP at
    Wells Fargo: Net earnings up 21% to $4.1B (via Ticker at

    Someone tell me again why we bailed these greedy fatcats out?

    Move your money to a CU.

    • LadySiren is murdering her kids with HFCS and processed cheese says:

      Arrrrgh, my kingdom for an edit button. That should’ve read “Bank *EARNINGS* reports”. Sorry.

    • FyreGoddess says:

      November 5, 2011 is a Saturday. Please mention this to any organizers of this event that you have contact with. Most branches are closed , close early or have limited services on Saturdays. I understand the symbolism of November 5th, but logistically, few people will be able to actually close their accounts if thousands are trying to all do it on a Saturday.

      • LadySiren is murdering her kids with HFCS and processed cheese says:

        Actually, they want you to complete the move on or before Nov. 5th. My CU and most of the local bank branches here are open on Saturdays.

        In regards to B of A: Yep, it’s an accounting thing but still…$6.2B. Tell me again why they need to charge me $60 yearly to access MY money?

        • Bsamm09 says:

          I’d say it’s the same reason we raise fees to our clients. We want you to leave and if you don’t, you are going to pay substantially more for the same service.

          If you read the links, you will see that BofA is not looking too good. It’s revenues are way down in areas that have helped it in the past. It is way too big. Their other gains in the report were mainly from selling off other assets. Selling off other assets and phantom accounting gains won’t keep you afloat forever.

    • Bsamm09 says:

      BofA’s gain was an accounting gain. If you actually look at what they actually did, it doesn’t not look good at all. The one good thing about them is they are trimming down as a company. This may help them out later on, if they can survive. Their core business and the ML side is not looking as good.

      “The income included accounting gains of $4.5 billion and $1.7 billion, both related to drops in the value of its debt. When the price of the bank’s debt falls, the bank could theoretically buy it back at a lower cost. Accounting rules require that an income gain be recorded when that happens.”

      BofA’s gain was an accounting gain. If you actually look at what they actually did, it doesn’t not look good at all. The one good thing about them is they are trimming down as a company. This may help them out later on, if they can survive. Their core business and the ML side is not looking as good.

  12. dolemite says:

    I think consumers should drop them even if they do reconsider the fee. All banks are trying to nickel and dime customers now. If enough leave, they will adjust their practices.

  13. Alliance to Restore the Republic of the United States of America says:

    Are we just going to keep bitching about BoA or are we going to pull all our money out and let them tank or what?

    Enough talk.

  14. ldillon says:

    This is completely Bank of America’s choice. Better to drop BoA.

  15. Xyjar says:

    What’s the problem? They can charge what they want, and I can choose not to bank with them. We would be shocked by a similar movement to force a shoe company to sell all their shoes at cost for $5 each. And BoA like a the shoestore that’s asking $100 for each pair of shoes. Let them charge whatever they want and let anyone with a brain choose not to be their customer. You shouldn’t need to force someone to not buy $100 shoes when the shoes’ market value is $20, unless they are without any common sense of their own.

  16. dush says:

    A price for a product, who is to determine what is arbitrary in that price?
    Why aren’t Consumers Union going after other businesses for making profit?

  17. Madman says:

    If people don’t like the fee bank elsewhere – no one says you have to stay with BoA.

    The notion that banking should be free is pervasive and the bank’s really only have themselves to blame, but it’s a business and they should be able to charge for their services.

    At least now the charge is transparent to the consumer whereas before it was hidden in higher prices.

  18. Madman says:

    If people don’t like the fee bank elsewhere – no one says you have to stay with BoA.

    The notion that banking should be free is pervasive and the bank’s really only have themselves to blame, but it’s a business and they should be able to charge for their services.

    At least now the charge is transparent to the consumer whereas before it was hidden in higher prices.

  19. chucklebuck says:

    Wasn’t the bailout akin to being made to do business with BoA without a choice? Not like we could just take our tax money and loan it to our credit unions instead.

    In general, I agree with the people on the “let the market work, take your money elsewhere, go capitalism” crowd, but the taxpayer funded bailouts removed that argument from the equation for me.

  20. Buckus says:

    Bank of America to Consumers Union: “U serious? How am I going to afford my 3 yachts without that fee? Daddy’s got bills too, you know!”

  21. Iroc says:

    Bank of America reports $6.2 billion profit for third quarter, but must have your $5$62-billion-profit-for-third-quarter,-but-must-haveyour$5

    O Really?

  22. Dr.Wang says:

    I say keep the fee. In fact, I say make it $50 a month. If $5 was such a good idea then $50 must be an even better idea. Heck, go for broke, make it $150 a month! That would fix the problem once and for all. 2012, it becomes $5, in 2013 it should become $50, and in 2014 hike the monthly fee all the way up to $150 a month in fees.

    Go for it BOA!!

  23. ancientone567 says:

    It is real simple. A bank cannot run as a bank without any customers. Time to leave your banks people.

    • NeverLetMeDown says:

      A bank cannot run as a bank without any MONEY. Any bank would prefer 10 customers with $10k each in their checking accounts to 1000 customers with $100 each.

  24. nocturnaljames says:

    I think this $5 thing is great, it will finally motivate more people to get out of for-profit banks because they can actually see their personal money beings stolen, instead of it being stealthily stolen through bailouts & inflation.