Arizona Federal Credit Union leadership didn’t learn from the mistakes of Bank of America, Chase Bank, Regions Bank, SunTrust Bank, Wells Fargo Bank.

It is often said that if one doesn’t study history, that one is doomed to repeat the mistakes of the past. We give AZFCU an “F” in history.

We present for your review how the banks in 2011 announced $5 monthly debit card fees, then cancelled those plans due to customer outrage. Why can’t Arizona Federal leadership learn from the mistakes of banks or learn from their own members that AZFCU angered by launching an asinine $3 monthly membership fee that is unavoidable?

http://usatoday30.usatoday.com/money/industries/banking/story/2011-09-29/bank-of-america-debit-card-fee/50608896/1

Bank of America joins banks charging monthly debit card fees
By Candice Choi, Associated Press
Updated 9/30/2011 12:20 PM

NEW YORK – Bank of America plans to start charging customers a $5 fee in any month that they use their debit card to make a purchase.

The fee will be rolled out starting early next year.

A number of banks already have either rolled out or are testing such fees. Bank of America’s announcement carries weight because it is the largest U.S. bank, measured by deposits.

Anne Pace, a Bank of America (BAC) spokeswoman, said Thursday that customers will only be charged the fee if they use their debit cards for purchases in a given month. Customers won’t be charged if they only use their cards at an ATM.

The fee will apply to basic accounts and will be in addition to any existing monthly service fees. For example, one of the bank’s basic accounts charges a $12 monthly fee unless customers meet certain conditions, such as maintaining a minimum average balance of $1,500.

A fee for using debit cards is still a novel concept for many consumers and was unheard of before this year. But there are signs it may soon become an industry norm.

SunTrust, a regional bank based in Atlanta, began charging a $5 debit card fee on its basic checking accounts this summer. Regions Financial, based in Birmingham, Ala., plans to start charging a $4 fee next month.

Chase and Wells Fargo are also testing $3 monthly debit card fees in select markets. Neither bank has said when it will make a final decision on whether to roll out the fee more broadly.

The growing prevalence of the debit card fee is alarming for Josh Wood, a 32-year-old financial adviser in Amarillo, Texas.

Wood relies entirely on debit cards to avoid interest charges on a credit card. If his bank, Wells Fargo, began charging a debit card fee, he said he would take his business to a credit union.

If a debit fee became so prevalent that it was unavoidable, Wood said he’s not sure how he’d react.

“I might use all cash. Or go back to writing checks,” he said.

The debit card fee isn’t the only unwelcome change checking account customers are seeing. The banking industry has been raising fees and scaling back rewards programs as they adjust to new regulations that will limit traditional revenue sources.

Starting Oct. 1, a regulation will cap the fees banks can collect from merchants whenever customers swipe their debit cards. Those fees generated $19 billion for banks in 2009, according to the Nilson Report, which tracks the payments industry.

There is no similar cap on fees that banks can collect from merchants when customers use their credit cards, however. That means banks may increasingly encourage customers to reach for their credit cards, reversing a trend toward debit card use in the past several years.

An increasing reliance on credit cards would be particularly beneficial for Bank of America, which is a major credit card issuer, notes Bart Narter, a banking analyst with Celent, a consulting firm.

“It’s become a more profitable business, at least in relation to debit cards,” Narter said.

This summer, an Associated Press-GfK poll found that two-thirds of consumers use debit cards more frequently than credit cards. But when asked how they would react if they were charged a $3 monthly debit card fee, 61% said they would find another way to pay.

If the fee were $5, 66% said they would change their payment method.

Bank of America’s debit card fee will be rolled out in stages starting with select states in early 2012. The company would not say which states would be affected first.

http://usatoday30.usatoday.com/money/perfi/credit/story/2011-11-01/bank-of-america-drops-debit-fees/51026748/1

Bank of America drops debit card fees
By Sandra Block, USA TODAY
Updated 11/1/2011 6:29 PM

Citing customer concerns and a “changing competitive marketplace,” Bank of America said it won’t charge customers a fee for using their debit cards.

Customers use Bank of America ATM machines in Los Angeles after protestors cover the machines with yellow danger tape and protest signs during an anti-Wall Street demonstration.

“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” said David Darnell, co-chief operating officer. “Our customers’ voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”

On Monday, SunTrust and Regions Bank announced that they have abandoned plans to charge customers a debit card fee. On Friday, Wells Fargo announced that it has canceled plans to test a debit card fee in five states.

JPMorgan Chase, which has been testing the fee in two states, has also decided not to extend the fee when it expires this month, according to a source with knowledge of the plan who isn’t authorized to discuss it.

Bank of America’s plan to charge customers $5 a month to use their debit cards sparked a powerful consumer backlash. Even President Obama weighed in, stating the fee pointed up the need for a strong consumer watchdog. Activists have designated Nov. 5 as “Bank Transfer Day” and are urging consumers with accounts at Bank of America and other big banks to switch to a small bank or credit union.

“For many consumers, the Bank of America debit card fee was the last straw,” said Norma Garcia, manager of Consumers Union’s financial services program.

Banks have blamed the new fees on a regulation that slashed the fees financial institutions can charge retailers whenever consumers use their debit cards. The regulation exempted banks and credit unions with assets of less than $10 billion.

While customers will escape debit card fees, banks will likely make up for the lost revenue in other, less visible ways, analysts say. Free checking, for example, is rapidly disappearing. Only 45% of non-interest checking accounts are free, down from 65% in 2010, according to a survey by Bankrate.com.

Banks “will find some way to increase their revenue, and it’s always the consumer that will end up paying for these increases,” says Bill Hardekopf, chief executive of LowCards.com.

http://usatoday30.usatoday.com/money/perfi/credit/story/2011-10-28/chase-debit-card-fees/50980342/1

Chase, Wells Fargo drop plans to charge debit card fees
By Sandra Block, USA TODAY
Updated 10/28/2011 7:49 PM

A month after Bank of America got pummeled by consumers and lawmakers for introducing a monthly debit-card fee, other big banks are backing off plans to charge customers for using their debit cards.

JPMorgan Chase has decided not to charge customers to use their debit cards, according to a source with knowledge of the plans but who isn’t authorized to discuss the matter.

Wells Fargo also announced late Friday that it has cancelled plans to test a debit card fee in five states. “Wells Fargo remains committed to helping our customers succeed financially and we believe this decision is in the best interest of our customers,” a Well Fargo spokesperson said.

In February, Chase launched a pilot program that charged customers in Georgia and Wisconsin a $3 monthly debit card fee. The program will expire in November and Chase doesn’t plan to extend it, according to the source.

Consumers Union applauded the decision and called on Bank of America to rescind its plans to start charging customers a $5 monthly debit card fee, starting in 2012.

“Consumers Union has heard from thousands of consumers across the country who are outraged that Bank of America is instituting the $5 monthly debit card fee,” said Norma Garcia, manager of Consumers Union’s financial services program.

“We always take into consideration feedback we receive from our customers,” a Bank of America spokesperson said in response, “and are committed to being clear and transparent about our fees so that customers understand their options in paying for services and ways they can avoid fees.”

Starting in November, SunTrust, a major regional bank, will charge customers a $5 monthly debit card fee. Regions Financial, based in Birmingham, Ala., has also added a $4 monthly debit card fee. Wells Fargo is testing a $3 monthly fee in some of its markets.

Banks that have raised their fees said a regulation that took effect Oct. 1 left them with no other choice. That regulation cut in half the fees financial institutions can charge retailers whenever consumers use their debit cards for purchases. The regulation exempted banks and credit unions with assets of less than $10 billion.

But other big banks have made of a point of publicizing the fact that they don’t charge a debit card fee. Citibank earlier said it decided not to charge a debit card fee because customers made it clear that they didn’t want to pay for the convenience of using their cards. TD Bank put out a press release Friday stating that it will continue to offer its customers debit cards with no monthly fee.

TD Bank said a survey of its customers revealed that 70% would discontinue their account if the bank charged a debit card fee.

Most small banks and credit unions don’t charge debit card fees. In an effort to attract new deposits, some of those institutions have launched advertising campaigns urging angry customers of big banks to switch accounts.

A grassroots effort on Facebook has designated Nov. 5 “Bank Transfer Day” and is encouraging consumers who are unhappy with new bank fees to move their accounts to credit unions or community banks.

http://usatoday30.usatoday.com/money/perfi/credit/story/2011-10-31/suntrust-drops-debit-card-fees/51018838/1

Two more banks drop monthly debit card fees
By Sandra Block, USA TODAY
Updated 11/1/2011 6:28 PM

SunTrust Bank and Regions Bank have joined the list of banks that have abandoned plans to charge customers a fee for using their debit cards.

Atlanta-based SunTrust said Monday that it has eliminated a $5 monthly debit-card fee scheduled to take effect Nov. 2. Customers who have already paid the fee will be reimbursed, the company said.

“We believe banking is a relationship business and recognize the importance of responding to client preferences,” said Brad Dinsmore, Consumer Banking and Private Wealth Management executive at SunTrust. “We’ve listened to our clients’ feedback and will provide the convenience and security of check cards at no additional charge as part of all of our checking accounts.”

Regions Bank, based in Birmingham, Ala., said late Monday that it has also eliminated its $4 monthly debit card fee and will refund fees already paid. “We have heard from our customers and are responding to their feedback by eliminating the monthly fee” for debit cards, John Owen, head of consumer services for Regions Bank, said.

On Friday, Wells Fargo announced that it has canceled plans to test a debit card fee in five states. JPMorgan Chase, which has been testing the fee in two states, has decided not to extend the fee when it expires this month, according to a source with knowledge of the plan who isn’t authorized to discuss it.

Chase is also said to be ending a test of a basic checking account that charged a $15 monthly fee. Chase’s basic bank account currently charges a $12 monthly fee unless customers meet certain conditions, such as maintaining a minimum balance or setting up direct deposit.

Bank of America hasn’t canceled plans to charge a $5 monthly debit card fee that consumers and lawmakers have lambasted it for since the bank announced the fee. Activists have designated Nov. 5 as “Bank Transfer Day” and are urging consumers with accounts at big banks to switch to a small bank or credit union.

“For many consumers, the Bank of America debit card fee was the last straw,” said Norma Garcia, manager of Consumers Union’s financial services program.”

Banks have blamed the new fees on a regulation that took effect Oct. 1 that slashed the fees financial institutions can charge retailers whenever consumers use their debit cards. The regulation exempted banks and credit unions with assets of less than $10 billion.

While most customers will escape debit card fees, banks will likely make up for the lost revenue in other, less visible, ways, analysts say. Free checking, for example, is rapidly disappearing. Only 45% of non-interest checking accounts are free, down from 65% in 2010, according to a survey by Bankrate.com.

Banks “will find some way to increase their revenue, and it’s always the consumer that will end up paying for these increases,” says Bill Hardekopf, chief executive of LowCards.com.

http://usatoday30.usatoday.com/money/industries/banking/story/2011-10-31/suntrust-cancels-5-dollar-debit-fee/51015590/1

SunTrust latest to reverse $5 monthly debit card fee
By Eileen Aj Connelly, Associated Press
Updated 10/31/2011 5:16 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.

http://usatoday30.usatoday.com/money/industries/retail/story/2011-11-01/consumer-backlash/51032364/1

Bank of America fee retraction shows effect of consumer rage
By Bruce Horovitz, USA TODAY
Updated 11/1/2011 8:08 PM

Consumer rage in an electronic age has corporate titans doing something few have so willingly done before: back-pedaling.

Thousands of angry citizens have protested in cities across the world in demonstrations inspired by the Occupy Wall Street protest in New York City.

When Bank of America announced Tuesday that it was nixing its widely panned plan to charge consumers a monthly $5 debit card fee, it joined a handful of other familiar banks that also had back-pedaled. The unusual moves follow a recent, customer-instigated about-face by Netflix, which scrapped plans to split into two businesses and ultimately charge customers more.

“Every company is now sitting on electronic quicksand,” says Howard Rubenstein, the famed New York PR guru. “It may look like solid ground, but one wrong move and you’re up to your chin.”

Some see it as the Occupy Wall Street of the no-longer-silent majority. Most corporations only become aware of the wallop of this emerging consumer power when they make a serious mistake and fall victim to it. This new, power-to-the-grumbler movement is only going to grow.

There’s a considerable price to be paid in damaged reputation — and lost business — to companies that don’t pay heed. Some $58 billion in transactions may be at risk from Americans who had a problem with a product or service purchased within the last year, estimates a study due out today from the W.P. Carey School of Business at Arizona State University.

“Most companies don’t handle problems well,” says Mary Jo Bitner, the business professor who oversaw the study. “And that only gets people more enraged.” Behind the banter:

•Social media explosion. “For the first time ever, the volume of response is now visible because of social media,” branding consultant Martin Lindstrom says.

For example, Consumers Union reached out to 780,000 people on its opt-in list following the original BofA debit card fee announcement, and some 40,000 of them asked for a congressional investigation into the fees, says Norma Garcia, manager of the watchdog group’s financial services program. “The bigger message is: consumers matter,” she says.

•Frustrated consumers. The sheer number of people experiencing serious problems with companies, products or services keeps growing, Bitner says. The figure, which should be declining, she says, instead ballooned this year to 45% of consumers from 32% in 1976.

•A chance to matter. Many consumers are anxious about their jobs; angry about their salaries and increased workloads; upset about climbing health care costs; and worried about their mortgages, notes Bitner. She says there’s still one thing under their control: the chance to speak out.

Advertisements

About Arizona Federal Credit Union Members United

Arizona Federal Credit Union Members United is a group of over 100 members and former members who care about our credit union being run fairly. The leadership of the credit union has failed to represent us properly by enacting a new and unnecessary, unavoidable, unconscionable, $3 monthly membership fee that we did not want. The members did not ask for this. Before implementing such a counter-productive fee, the proposal should have been put up for a vote to all the members to decide, so the will of the people is followed. The member-owners of Arizona FCU should not be taxed $3 monthly, simply for being a member. We want all the $3 monthly member fees refunded to all current and past members, the elimination of the fee going forward, and the elimination of the $25 rejoining fee. We are against any financial institution charging an unavoidable ongoing membership fee, simply for being a member. This is the wrong approach. Members and customers should be valued, not punished. We want to see Arizona FCU succeed, not fail. Imposing unfair policies that are detrimental to the long-run success of the credit union and detrimental to society should be abolished.
This entry was posted in angry members, banks, competition, principles, values, listening to members and tagged , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s