The banks listened to their customers and dropped the outrageous fees. When will Arizona Federal Credit Union get smart and listen to its members?
SunTrust axes $5 monthly debit card fee
by Eileen Aj Connelly – Oct. 31, 2011 12:24 PM
NEW YORK – SunTrust Bank said on Monday it will stop charging a $5-per-month fee for using debit cards and return the fees it’s collected since June to its customers.
The Atlanta-based bank followed larger rivals like Chase and Wells Fargo in backing off the fees.
The retail banking division of JPMorgan Chase let news leak Friday that it will not expand the $3 monthly fees it is charging in tests in Wisconsin and Georgia when they end in November. Wells Fargo followed with an official end to its testing of a $3 fee in five states, which had started Oct. 14.
Regional bank SunTrust (STI) says it “listened to our clients’ feedback” in making the decision to stop charging the fees.
Bank of America also said it plans to offer ways to avoid the fees through use of services like direct deposit and or maintaining certain balances, but the bank has not officially laid out its policy.
It was news last month that the Charlotte-based Bank of America planned to charge $5 per month for using debit cards for purchases that generated the most reaction among consumers. Even President Obama joined in the criticism.
The widespread anger helped spark a movement that is encouraging bank customers to move their money to credit unions and community banks that don’t charge such fees. “Bank Transfer Day” is slated to take place on Saturday, but neighborhood-based institutions around the country have already reported sharp increases in account openings ahead of the movement’s designated date for switching. Several larger banks, including Citibank, US Bancorp, PNC Financial and TD Bank, have jumped on the issue to highlight that they do not charge debit fees, although they may charge monthly maintenance fees for checking accounts.
Banks pushed the adoption of debit cards in the past decade in part because it is less expensive to handle transactions made with plastic than with cash or paper checks. Debit quickly became popular, and surpassed credit cards as the most popular form of non-cash payment several years ago. Usage has continued to increase as the economy has continued to struggle.
But a new federal regulation that kicked in Oct. 1 cut in half the fees banks could charge to retailers for processing purchases made with debit cards. That came on top of other recent restrictions for charging overdraft fees — which soared with automatic overdraft coverage for debit cards — and tighter rules on credit cards. Banks said they were instituting the debit card fees as a way to make up revenue lost to these new rules.
SunTrust’s announcement leaves only Regions Financial among large banks charging such fees. Regions began charging $4 per month in October.