Bank of America decided to drop the plans to charge a $5 monthly fee for its debit card use in response to complaints from both customers and politicians.
Bank of America said the move to drop the fees was in response to customer feedback and competition, with the company reversing its spoken “right” to turn a profit to, instead, listening to its customers.
The company was under pressure to make the change as rivals backtracked from plans to charge customers for using their debit cards.
David Darnell, Bank of America’s co-COO, said in a statement:
“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee.”
Slipping in rank behind JPMorgan Chase in largest U.S. banks, Bank of America‘s CEO Brian Moynihan had earlier defended their decision of the ATM fees by saying the bank “has a right to make a profit”.
However, Bank of America reported profits at $6.2 billion in its third quarter profit report in October.
Last week, JPMorgan Chase & Co and Wells Fargo & Co decided to cancel test programs for debit card fees, while SunTrust Banks Inc and Regions Financial Corp said on Monday they would end monthly charges and reimburse their customers.
After Bank of America announced their debit card fee, Navy Federal Credit Union, the nation’s largest credit union, reported their volume of new account openings was more than 20% above normal.
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 new bank fees sparked a firestorm of criticism from consumers and politicians, and many smaller banks and credit unions shunned the practice.
Speaking out against the banks’ decisions in October in an interview with ABC News, President Barack Obama criticized the banks’ slew of fees saying that they don’t “have some inherent right just to, you know, get a certain amount of profit’ if their ‘customers are being mistreated”.
“Banks can make money. They can succeed, the old-fashioned way, by earning it,” said President Obama during interview.
Bank of America had planned to give customers more ways to avoid the charge, such as maintaining minimum balances, having a paycheck direct-deposited or using their Bank of America credit card.