Bank of America is retreating from plans to charge consumers monthly fees for using debit cards. Consumer advocates and irate account holders are declaring victory… for now. But if debit card fees are off the table, where will banks look for revenue next? We explore the backlash against user fees.


  • Robin Sidel Banking Reporter, Wall Street Journal


  • 13:06:40

    MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. Later in the broadcast, cooking a tricky recipe tonight? Hold the phone, there might be an app for that. But first, the great battle of Bank of America's debit card fees may be over. But where does the war over consumer banking go from here? Bank of America announced yesterday that it was retreating from a plan to charge consumers a $5 monthly fee for using its debit cards.

  • 13:07:21

    MR. KOJO NNAMDIAn about face that has left angry customers around the country declaring victory. B of A said the debit card fees were necessary to make up for money it expects to lose following new federal regulations. New rules for credit cards, debit cards, overdrafting, all of which seems to suggest that if debit fees or debit card fees are off the table, another mechanism to make up for lost revenue will soon be coming down the pike. Joining us to explore what's likely to come next is Robin Sidel, reporter at The Wall Street Journal. Robin joins us by phone from New York. Robin Sidel, thank you for joining us.

  • 13:07:57

    MS. ROBIN SIDELThanks for having me.

  • 13:07:58

    NNAMDIYou, too, can join this conversation, just call us at 800-433-8850 or go to our website to join the conversation there. Are you a Bank of America customer? Did its plans to impose debit card fees force you to think about taking your business away from Bank of America? Tell us why or why not, 800-433-8850 or send us a tweet @kojoshow. Robin, so it seems that Bank of America is backing off. It made it official yesterday that it's dropping its plans to charge monthly debit card fees. What ultimately forced Bank of America's hand?

  • 13:08:34

    SIDELWell, I think one of the main things that forced Bank of America's hand is that many of its rivals had already backed away from such a plan. Some of them never planned to do it in the first place and now over the past few days, we've seen big banks like Chase and Wells Fargo and Regional -- large Regional banks as well say, you know what, we were thinking about this, we've been doing it, some of them, and we've decided not to. So Bank of America, at that point, really couldn't stand alone.

  • 13:09:00

    NNAMDIBank of America, at that point, was the last big bank left standing with plans to impose those kinds of charges, right?

  • 13:09:06

    SIDELExactly. That's exactly it, not to mention, of course, there was a huge public outcry. And while that public outcry was tossed at all banks when everybody thought that everybody was going to be doing it, then certainly that focus was really just intensifying on Bank of America which made it even worse.

  • 13:09:24

    NNAMDIBank of America said that last year's financial overhaul legislation, The Dodd-Frank law, tied its hands on this, that the bank needed new revenues to make up for money that it was going to lose under the new regulations. Where does it lose money or where do banks lose money under the new system and how much water does that argument carry?

  • 13:09:44

    SIDELWell, this argument is directly related to a provision in last year's Dodd-Frank overhaul -- financial overhaul law, which basically cut the amount of money that banks can charge merchants for accepting debit card transaction, cut it in half. So that was revenue -- I mean, that's real money. So they are losing half of that revenue from merchants and they want to make it up. And so -- because they can't get that revenue from merchants, they turn to their customers.

  • 13:10:10

    NNAMDI800-433-8850 is the number to call. What concerns do you have about where consumer banking is headed? Are you worried that banking might become, like, oh, flying where you charge more for your peanuts, your bags and so much more? 800-433-8850 is the number to call. Robin, it seems, I guess, that the next natural question is if debit card fees are off the table, where are businesses like Bank of America going to look to next to make up for it? Is consumer banking going to start looking like the airline industry that I just mentioned where people are charged fees for their bags, for their peanuts, for using headphones?

  • 13:10:49

    SIDELWell, I think what this shows is that people don't like those ala carte fees. They don't like to be nickel-and-dimed on each individual product. And I think the banking industry heard that. But already, we've seen over the past year, pretty much every big bank introduce new checking account and raise fees on its checking accounts. So I think there are certainly going to be more higher fees put on those checking accounts, a minimum balance or a minimum fee, a monthly fee of, let's say, $12. For all we know, can move up to $15. And they may also make it harder on customers to get those fees waived.

  • 13:11:22

    SIDELBecause right now, there are plenty of ways for some customers to get those fees waived so they might kind of tighten that so that they can get some more revenue. And, I mean, aside from fees, they're really going to have to look into their own houses and cut more costs and lay people off. And I think that already we've seen some banks start, you know, trimming some of their plans to expand and build new branches. And we're just going to be seeing more of that.

  • 13:11:49

    NNAMDIRobin, what did the banks that experimented with these kinds of fees learn from doing so and why did Bank of America, in particular, attract so much of this backlash?

  • 13:11:58

    SIDELWell, you know frankly, it's Bank of America's success as being a huge consumer bank, right? That's what attracted -- you're huge, you've got tons of customers, so that's the good news. The bad news is those tons of customers were angry at the bank and let themselves be heard. And you know, I think that's certainly not going away any time soon and banks are certainly aware of that. I think they were shocked by the public outcry because, again, people grumbled a bit about some of these other fees, but for some reason, these debit card fees really stuck in the customers craw.

  • 13:12:33

    NNAMDIRobin Sidel is a reporter at The Wall Street Journal, she joins us by phone. We're discussing Bank of America's decision to drop its $5 monthly charge for use of its debit cards, why that happened and what we may be seeing coming down the road. The number to call is 800-433-8850. We go to Jay in Annapolis, Md. Jay, you're on the air. Go ahead, please.

  • 13:12:56

    JAYHey, how you doing?

  • 13:12:57

    NNAMDII'm well.

  • 13:12:59

    JAYWell, I'm one of the consumers that wasn't able to speak so I'm speaking now. This bank, I like it only because it has a few services and my wife's from Mexico so we use this service of (word?) . But, like you say, they've already gone up on your rates and your fees. You know, people are going to end up going -- we're all heading back toward the old days with this economy, the way it's looking like. And I considered just taking and closing out the account and -- but I have another little private bank that they're telling me now, that they're changing some of their fees so maybe they're trying to come up and be larger like Bank of America.

  • 13:13:46

    JAYThese big banks are robbing us. You know, we're being robbed anyway in the United States by everything, but we don't need to be charged and taxed for every little thing. I think people are getting tired of it, you know. But anyway, I appreciate being able to put my two cents in. I'm glad to read in the newspaper, yesterday, that the bank had declined their move. So I think we need to all stick together and start hollering about little bit of everything because we're being robbed on every side of the globe. Thank you and have a wonderful day.

  • 13:14:20

    NNAMDIYeah, Jay, the notion of sticking this under your mattress seems to be coming -- becoming more attractive to some people. Jay, thank you very much for your call. We move onto Emanuel in Washington, D.C. Emanuel, you're on the air. Go ahead, please.

  • 13:14:34

    EMANUELThank you, Kojo, for taking my call. I would like to echo the previous caller's position. I've had it with banks using all kinds of tricks to stick it out to us. Late fees, here and there. And you would think that a bank would want to do legitimate business and make money out of -- in a legitimate way. If they think that fines is the way to make money, then I'm ready to pack up and leave and take my account, my money, and go elsewhere.

  • 13:15:05

    NNAMDIOkay. Thank you very much for your call. You know, one of the things that strikes me about this, Robin Sidel, is that all of those incomprehensible figures that we see on our gas bills, our electricity bills and our phone bills, what we understand with the statements that we get from our bank is that those things are all fees and that in at least this one case, one gets the impression that people felt, finally, something we can do something about.

  • 13:15:33

    SIDELWell, I think that's true. And if you look at the airline baggage fees, people don't like that, but, you know, you've got a limited number of airlines that you can fly. And when they all start charging fees or most of them start charging fees, you're kind of stuck. I mean, there are 7,500 banks in this country and so people see -- not to mention credit unions. So people see, in the banking industry, that they really do have an alternative place to go where they may not, for something like their electric company or their cable company or their airline.

  • 13:16:06

    NNAMDIThe debate of the debit card fees overlapped with the emergence of the Occupy Wall Street protest, Robin. And all of the offshoots that have sprung up around the country, how do you think the rise of this movement contributed to the momentum of the argument against the fees?

  • 13:16:22

    SIDELI don't know if Occupy Wall Street really contributed to the momentum, but I think it really shows that people are cranky. I mean, look at all the letters that Netflix got from consumers when it changed its fee structure. You know, people are financially strapped. They are, you know, hear about gazillion dollar pay packages from all kinds of corporate executives and not just in the banking industry. They're hearing about Greeks -- you know, Greece and its financial distress and how that it's going to affect, potentially, Europe. And so people are nervous and they are cranky and you know, they are being increasingly vocal about it.

  • 13:17:00

    NNAMDIHere is Jamie in Arlington, Va. Jamie, you're on the air. Go ahead, please.

  • 13:17:04

    JAMIEHi, yes, hi. Well, I recently closed my account with Bank of America because of the change that they were going to make on the monthly fees, but not only that, but also because of the lack of service and the lack of technology in terms of just even, like, sending a document. I need -- you know, I had several occasions where, you know, I had to send a document and they actually had a fax and they couldn't even use the email. So I don't know how they implemented their technology in terms of service.

  • 13:17:30

    JAMIEAnd also in the past, I had issues also with the Bank of America interest rates were extremely high. And I think that people are being extremely vocal, not only because of the service, but also because of the economical crisis that we're going through right now. And that's pretty much, you know, why I made my decision of leaving Bank of America.

  • 13:17:51

    NNAMDIYeah, I thought -- I was thinking about that, Robin Sidel. Part of it has to do with the overall economic picture in the country right now. People feel, I guess, that they're being beaten down enough as it is. They don't need any more.

  • 13:18:02

    SIDELYes. I think that's exactly it. And, yeah, people are just really tired of being nickel-and-dimed. And until the economy really improves, you know, I think we're going to see more of this and not just to banks, but to -- you know, obviously we're seeing that aimed at Washington and politicians and anybody who does something that the public views as being, you know, irrational and unfair.

  • 13:18:27

    NNAMDIDo you think we're learning anything through this right now about the power of social movements and social media to influence strategic business decisions at all?

  • 13:18:36

    SIDELWell, I think so. You know, it's pretty interesting. The banking industry is well known for moving extremely slowly on everything. And the fact that they did an about-face so quickly shows that they were very susceptible and aware of the power of the opposition and the fact that, you know, they -- it was incredibly unpopular.

  • 13:19:01

    SIDELI mean, it's kind of astonishing to think of -- someone mentioned to me that it, you know, that they actually thought that, you know, people were going to accept this. There are alternatives to debit fees, to debit cards. You can use cash, you can use check, you can use credit cards. But, you know, I think, again, I just think that we will see more of this. And I think the banks were shocked, but they've definitely learned a bit of a lesson.

  • 13:19:24

    NNAMDIWhen you say, we'll see more of this, are there any indications at all that we are likely to see a movement of consumers to credit unions and community banks?

  • 13:19:33

    SIDELWell, I think people say that, but I think we don't see it as much as you'd think. It's very difficult and time consuming to move your money from anywhere to some other place, you know.

  • 13:19:42

    NNAMDIOh, some people were telling me about how difficult the time they had and simply closing their Bank of America accounts.

  • 13:19:48

    SIDELOf course. But even if you've got, you know, moving from any bank to another bank or any credit union to another one, it's a real pain in the neck and I think it gets to a point where people have to have a level of frustration that's up to a certain point before they'll do it. I think they'll complain, they'll grumble, they'll threaten to do it.

  • 13:20:07

    SIDELBut I talked to some people who were customers of a couple of banks that were already starting to charge and they had --they started exploring moving their money. One person couldn't find a credit union. Another person didn't have another bank that was close enough. And they said, you know what? I'll just eat the fee right now.

  • 13:20:24

    SIDELAnd, you know, I think that's frankly how it usually comes down for most people. They might not like it but, you know, they wind up staying with their bank often. But it doesn't mean that they're not going to stop complaining.

  • 13:20:37

    NNAMDIOne more question, Robin. Where do retailers fit into all of this? The other party involved in so many of the transactions that involve debit cards. I remember hearing you once say that retailers and banks are like a dysfunctional family.

  • 13:20:49

    SIDELOh, oh, my own words coming back to haunt me.

  • 13:20:51

    NNAMDI...come back to haunt you, yes.

  • 13:20:51

    SIDELThat's still true though. Well, I mean, I think -- look, I mean, these changes in debit cards are definitely going to benefit the bottom line of retailers. The banks fought this law very strenuously and they lost. They spent a lot of money trying to fight it. And the merchants obviously wanted their fees to go down. And, you know, we'll see what they're going to be doing with the extra money. Who knows? We don't know yet. I mean, this new law only took affect October 1. It's only a month, but we'll see.

  • 13:21:22

    SIDELBut people like to hate their banks, I think, more than they like to hate their retailers.

  • 13:21:27

    NNAMDIRobin Sidel is a reporter at the Wall Street Journal. She joins us by telephone from New York. Robin, thank you so much for joining us.

  • 13:21:33

    SIDELThanks for having me.

  • 13:21:35

    NNAMDIWe're going to take a short break. When we come back, it's food Wednesday. Cooking a tricky recipe tonight? Hold the phone. We might have an app for that. I'm Kojo Nnamdi.

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