Bank of America to Raise $5 Debit Card Fee Threshold to $20,000

[deminks]

http://dailynewscorner.com/bank-of-america-to-raise-5-debit-card-fee-threshold-to-20000/5122/

Bank of America (NYSE:BAC) is poised to make it increasingly difficult for their legions of customers to waive the hugely unpopular $5 debit card fee, which is to go into effect next year. The second-biggest bank in Central Florida is to eliminate its Advantage checking program, which required no more than $5,000 in overall deposits in order to see the $5 fee waived. As of now, it will require at least $20,000 in order to enjoy the same privilege, forming part of the bank’s new ‘Premium Solutions’ offering.

However, customers who currently hold a mortgage with Bank of America will also be able to waive the fee, according to official reports.

The CEO of the national giant came forward this week to speak about the new move, stating that the increase in required deposits is designed to encourage customers to bring more business to the bank. This of course contradicts the millions who have labeled the new initiative as nothing more than profiteering, which is something the bank refused to respond to.

(end snip)

It's not like they need the cash.

http://www.nytimes.com/2011/10/25/business/banks-flooded-with-cash-they-cant-profitably-use.html

(snip)

“We just don’t need it anymore,” said Don Sturm, the owner of American National Bank and Premier Bank, community lenders with 43 branches in Colorado and three other states. “If you had more money than you knew what to do with, would you want more?”

(end snip)

So, it must be pure greed.

What would Jesus do, BOA?

#occupywallstreet.

[Junkdrawer]

1. Because they can...

Free market compulsion.

[justiceischeap]

2. Your average BoA customer is not going to have that kind of money

just sitting in their accounts. It's insulting to say what they said about the fees.

[GreenStormCloud]

3. Read the entire NYT article.

That pile of money they have isn't profit but is deposits in accounts. The bank can't use such deposits for its operating expenses or as profits. From the article:

"The banks are also earning less on the deposits left over to invest. They typically park that money overnight at the Fed for a pittance, or invest it in ultra-safe securities, like bonds backed by the government. But with interest rates so low, the yields on those investments have been crushed.

In other words, what bankers call the spread is being squeezed — they are making less money on each dollar they hold. “It’s very hard for us to take deposits and make any meaningful spread,” said William D. Parent, Hyde Park’s chief executive."

I have two debit cards with BoA. Five dollars a month is a rather trivial amount that I am not going to get excited about. I remember my first checking account in 1969 that charged ten cents for each check written. When adjusted for inflation that is over a dollar per check.

If I am using a service then why shouldn't I pay for that service?

[ixion]

7. Well, for starters, you've already bailed out BoA

and they charge fees up one side and down the other, in any case.

Hey, no one if forcing you to cancel your BoA account. If you enjoy turning over your cash to the banksters, well, ducky for you. :eyes:

[proud2BlibKansan]

12. Yes I agree.

I don't understand the anger over this. You have to pay for checks. What's the problem paying for a debit card? It's a lot cheaper than checks.

[ixion]

21. You don't use checks over and over, and they must be printed

that would be the primary difference. But don't worry, they're screwing you over there, too. Check printing prices have gone up, and the number of checks that constitutes a 'box' has gone down.

The banksters thank you for your support.

[GreenStormCloud]

25. Banks used to charge for processing each check.

Back in 1969 I had to pay ten cents per check. That wasn't a printing charge, it was for the work of the bank in processing the check. Adjusted 42 years of inflation that would be about a dollar a check for processing. Compared to that five dollars a month is peanuts.

[Broderick]

27. Interesting

Wasn't aware banks charged to write checks in the past. I guess that kind of makes the five dollars paltry.

[Occulus]

36. I have never in my life seen or heard of that

I was born in the mid seventies.

[GreenStormCloud]

43. I think I will make a thread tomorrow, "Being a bank customer in 1955 versus now."

The differences are vast and banks are much more convenient and cheaper now. I have to leave for work in a few minutes so I don't have time to do it now.

[GreenStormCloud]

60. Thread delayed until tomorrow. Have to run errands today. N/T

[proud2BlibKansan]

40. I remember those days

Banking used to be a lot more expensive than it is now.

[oldhippie]

49. Yep. I opened my first checking account in 1966 .....

... in my freshman year of college in order to pay all my tuition and other bills. It was with a regional upstate NY State bank (I think Marine Midland?) and there was a monthly fee of $1.00, a charge I don't remember for printing checks, and a $0.10 per check processing fee. Sometimes I had to cash the monthly check for my living expenses at a local business rather than going to the bank. The local business usually charged 2-5% of the amount as a check cashing fee. There were no ATMs. Those were all normal fees for a checking account for college students in those days. Businesses paid much more.

[Yupster]

47. They should have just left the swipe fees alone

What does the government know about swipe fees anyway. Why should they be the ones to set the rate?

The banks just went elsewhere top get the same money.

[Fuddnik]

15. If you can buy a cheaper bridge somewhere else, why not?

[lunatica]

4. BofA is thumping their nose at us

I bet they refuse to let anyone take their money out on Nov 5th. I betcha.

They'll probably freeze people's money so they can't have access to it until BofA decides they can.

[Yo_Mama]

11. Totally Asinine Comment

It's illegal, for one thing. You can't not allow someone to get their money out. This is in UCC code.

Second, the reason the banks are doing this is that they need to shed unprofitable business - those small account holders. So they want you to take your freaking money out - or pay up, and become profitable. They do not really care which you do.

Banking is a highly regulated business, and they will follow the law, believe me.

[Name removed]

16. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ixion]

23. Yeah, because they're always following the law, right?

:eyes:

[Fumesucker]

29. We had an example within the last week of people being denied access to BoA..

Because they intended to close their accounts.

Now you tell me that is illegal, has the bank manager been indicted yet?

[Vinca]

5. Move your money, move your money, move your money.

Can't be said often enough. There's one way to split up the big banks . . . make them small.

[Yo_Mama]

9. That will make the big banks happy

They don't want those small deposits any more. It's just a cost and a loss risk to them. They don't earn enough money off the accounts to pay them for deposit losses.

[lunatica]

17. So those quarterly billion dollar profits are not enough?

Do you weep for their plight?

[Vinca]

41. Not all of the people inclined to withdraw their funds are small accounts.

I'd like to see their faces when someone like Michael Moore switches to a hometown bank or credit union.

[City Lights]

6. They're doubling down.

Fuck 'em. :nuke:

[Yo_Mama]

8. Not getting it, are you?

Money deposited at banks is a loan to the bank. They are liabilities. Bank assets are in the form of loans they make to others, or in the form of bonds or guarantees of debt for which the bank gets paid a return on the money deposited with them.

Banks have costs for each account. What this article is telling you is that all banks are less interested in deposits, because they have few avenues to use deposited money to earn enough of a return to cover their costs and make a profit. Earlier this year BNY was charging large depositors!

The Fed's latest move - Operation Twist - is making almost every bank or CU reevaluate its business. There are few places in the country where loan demand from healthy borrowers is strong enough to make a bunch of new deposits strongly profitable.

In other words, BofA would be a healthier, more profitable bank if it dumped some of its small depositors, and it is proceeding to do so. Dodd-Frank was written by people who don't understand the industry and the times, and the small depositors are going to get clipped for it. It's even more startling that apparently the Fed governors don't understand Main Street banking!

Or, the short summary - we're turning Japanese. We're heading for a very slow-growth economy and another lost decade.

When interest rates are forced so low, banks have to be very careful about underwriting, so credit standards rise. That's because banks can't afford to take losses - their Net Interest Margin is so low that they can make only "safe" loans with very low loss fractions (when pooled). This is how Japan got where it is today, and it's where we're doing. We have people regulating banks who don't understand the industry, and this is what you get.

[lunatica]

18. Loan demand is too small?

Try getting a loan from them. You'll find it's more a supply side inability to let go of the money that we gave them.

You just can't stop shilling for the banks.

[GreenStormCloud]

26. You don't understand.

It is SOLID loan demand that is small. There are lots of folks who would borrow a ton of money and not be able to pay it back. Banks are having a hard time finding people who want loans who can pay the money back.

[Vinnie From Indy]

46. Absolute bullshit!

Please post anything resembling a credible source for this outrageous claim. Cheers!

[Yo_Mama]

54. Hard data coming up

How about FRB delinquency and chargeoff rates?

Delinquencies:
http://www.federalreserve.gov/releases/chargeoff/delallsa.htm

Chargeoffs:
http://www.federalreserve.gov/releases/chargeoff/delallsa.htm

With interest rates so low, banks are forced to be more conservative with underwriting standards. They're even more conservative about granting checking accounts, because they do take losses on those. Delinquencies are still way too high - about double tolerable levels:


Mortgage demand is down, mostly because people aren't buying houses. But many aren't buying houses because they don't qualify for a mortgage. But mortgage standards had to tighten, because look at the delinquency rate on single-family homes:

Oh and gee, it's rising again! Who could have guessed?

Small business loan demand is down too. Article:
http://www.freep.com/article/20111023/COL07/110230421/Susan-Tompor-Money-tight-small-businesses-loan-demand-low?odyssey=mod|newswell|text|FRONTPAGE|s

The major small business survey is NFIB.
http://www.nfib.com/research-foundation/surveys/small-business-economic-trends

Access to credit continues to be a problem that plagues few of those surveyed; only four percent reported financing as their No. 1 business problem. Ninety-two percent reported that all their credit needs were met or that they were not interested in borrowing, while only eight percent reported that not all of their credit needs were satisfied. Fifty-one percent of those surveyed said they did not want a loan. A net 10 percent reported loans “harder to get” compared to their last attempt (asked of regular borrowers only), down 3 points. The weak recovery provides little incentive to borrow to support expansion or buy new equipment, even if interest rates are low.

Consumers are cutting their credit card debt - over 200 billion dollars, or 20% over the last few years.


But hey, the reason for all this is that we borrowed far more than we could pay back, so now loan demand from prospects likely to repay the loans is necessarily slack:


And in the meantime, look at what has happened to demand deposits at banks:


If you need more data, just let me know. The truth is that banks do not want more deposits and most of them are deliberately trying to shed less profitable accounts. Most of them would be better off if they dumped 10% of their accounts.

[GreenStormCloud]

61. Thanks for the help. N/T

[Nuclear Unicorn]

38. This is why the bailouts were bad

Not because of bank profits but because it was fake money poured down a hole.

The housing bubble artifcially inflated prices and people with bad credit were given loans to play along. Those loans should never have been written. The best thing that could have happened would be to allow the foreclosures to go through and if the banks fail they could be split up and sold off. Instead, the bailout didn't save profit for the banks so much as it preserved a false value in the housing market. A $50,000 house flipped 3 times in 2 years may have sold for $75,000 and the bank may have written a loan to people who cannot afford a $75,000 mortgage but at the end of the day the house is really only worth $50,000 based on the supply of houses and what the buying public can/will pay for.

The bailouts are trying to maintain that false $75,000 value and they have as much profit motive as the bankers. If property values plummet the economy shrinks as real estate is a real asset. Property taxes and a host of other revenue generators figure off of property values. If property values contract and the taxes go with them that means public expenses either shrink as well or the fed has to bailout communities. Communities still have to pay teachers, police, firefighters etc and unless their salaries and equipment will reduce in price corresponding to the tax base you'll see deficits skyrocket. Banks, unlike your local town council, can make business loans, car loans etc. They can at least keep credit going so bailing out banks was the better bailout (but still stupid, period).

We don't need bailouts, we need price-resetting based on consumer-value-capital. The consumer should buy what they can based on their perceived value. If he can afford a $50,000 house let him buy one, not a house artificially inflated and don't give him a loan to do it either.

[Yo_Mama]

52. Net Interest Margin Doesn't Lie

Link here:
http://research.stlouisfed.org/fred2/series/USNIM?cid=93

It's getting worse. Net Interest Margin is the difference between net interest paid out and net interest earned. Net interest earned is reduced by all costs, such as credit losses, of course. Wiki definition:
http://en.wikipedia.org/wiki/Net_interest_margin

This graph only goes through Q2, and the situation is getting worse. Also, delinquency rates on some types of loans are rising.

[Atman]

10. Interesting story about this on MSNBC this morning...banks have too much money.

Literally. Banks are so flooded with cash they simply don't want/can't take anymore. Literally can't take anymore money, so they're coming up with ridiculous fees on people to discourage deposits. I am not making this up. We bailed them out, gave them the US Treasury, and in turn we can't get a loan and are charged $5 for accessing our own money.

OWS.

Just sayin'.

[quinnox]

13. I can't wait to see all the customers closing their Bank of America

accounts next year. There were polls saying tons of customers would rather move banks than pay the $5 fee. Methinks Bank of America is going to be sorry when it comes to the loss of business when all is said and done.

Their stock has already taken a pounding, how much lower can they go, maybe to a dollar or two a share.

If Bank of America needs help or they will go bankrupt in the future again, this time let them die.

[madokie]

14. Both banks we use are locally owned

one has been in existence since before I was born in '48 the other since the early '60s. If I/we want to buy something that we don't have the money for all we have to do is write a check for it and either bank will cover for us until we can get in to take care of the necessary paperwork. I shop and bank locally and always have. I trust them they trust me. We're charged 2 bucks a month on our debit cards and thats all which I find to be more than reasonable.

[Shagbark Hickory]

19. This was a bad bad move on BofA's part. The customers they need- the ones with money- are leaving

nt

[rdking647]

20. why get angry

therea a simple solution. MOVE YOUR MONEY. but people would rather bitch and moan. nobody forces you to have a BOA account. there are hundreds if not thousands of alternatives..

[slackmaster]

22. If I had a checking account at B of A, I'd close it.

What would Jesus do, BOA?

Close his account, like any other sensible person would.

[blueamy66]

24. ehhh

I'd rather pay $5 a month than move all of my accounts to another bank. Like the fact that they have ATMs EVERYWHERE.

BofA has always been good to me....sorry folks......waived NSF fees, wired $ for no fee, replaced $ ASAP when a debit card was lost and used illegally.....gonna stick with them for now

flame away

[GreenStormCloud]

28. My credit card number was compromised due to me falling for a scam.

Not the bank's fault that I fell for a scammer's line of bull. Part way through the scam phone call I realized what it was, hung up, immediately drove to my BoA branch (Some of them know my wife & I by name.) the card was canceled before it had been used, and I got a new card on the spot. No charge. I will stay with BoA.

[shanti]

35. any reputable bank or cu would do that for you

it's their ass if they don't.

[proud2BlibKansan]

39. BoA has excellent fraud protection

I've been through this a couple times. Card or number stolen and BoA has always put funds back in my account immediately. My credit union makes me wait 21 days.

I'm not happy with BoA's corporate policies or their failure to pay taxes, but as a customer, I can't complain about how I've been treated.

[RebelOne]

42. I am on your side. I have been a BoA customer for over

15 years. I have had the same experience as you: waived NSF fees, replaced ASAP lost debit card and reimbursed me for card used illegally, and ATMs everywhere. Plus there is a BoA bank around the corner from me, which makes it extremely convenient. And there is another one a mile down the road. I do all my banking online, but there have been occasions when I have had to go into the bank. Why would I join a credit union that is 12 miles from my house?

[OnyxCollie]

30. I corresponded with a financial advisor from Merril Lynch recently.

I said the $5 charge was either pure greed or complete desperation.

He said BoA needed to charge $5 because Dodd/Frank reduced the amount of money banks can charge for interchange fees. Because they were losing revenue, they need to charge $5. How could they make money with these draconian laws that were put in place?

Oh, and other banks were thinking of doing it, too. So there.

I looked it up; banks were charging $.44 per transaction when it cost them between $.06 and $.07. Dodd/Frank made it $.12 per transaction. Twice as much instead of six or seven times as much.

Poor little banks. Fuck 'em, greedy bastards.

The financial advisor was kind of a dick.

[subterranean]

31. Minor correction...

Dodd-Frank caps the interchange fees at $0.21 per transaction, not $0.12.

It's true they won't make as much profit from these fees as before, but they feel they're entitled to that money, and they'll get it one way or another. As BoA's CEO said in defending the $5 charge, "We have a right to make a profit."

[OnyxCollie]

33. That's not what I found.

BOARD PROPOSES DODD-FRANK DEBIT INTERCHANGE FEE AND ROUTING RULES
http://www.dltlaw.com/CM/Alerts/BOARD-PROPOSES-DODD-FRANK-DEBIT-INTERCHANGE-FEE.asp

Interchange Fees

The Board proposes two alternative interchange fee standards, one being a cost-based approach with a safe harbor (initially 7 cents per transaction) and a cap (initially 12 cents per transaction) and the other a stand-alone cap (initially 12 cents per transaction). The Board estimates that either of these standards would result in interchange fees more than 70% percent below the 2009 average, but nonetheless opines that "setting the cap at 12 cents per transaction will be sufficient to allow all but the highest-cost issuers . . . to recover through interchange transaction fees the costs incurred for authorizing, clearing, and settling electronic debit transactions." The Board also notes that issuers have sources of revenue in addition to interchange fees, such as cardholder fees, to help cover their costs. The Board also is requesting comment on possible frameworks for adjustment to the interchange fees to reflect certain issuer costs associated with fraud prevention.

[Yupster]

48. Government should have left swipe fees alone

What do Dodd and Frank know about banking business and its fees?

They didn't realize that forcing a change in one fee is just going to pop it up somewhere else, and probably in a worse place?

Why would Frank and Dodd think they know enough to micromanage debit card swipe fees?

[Yo_Mama]

56. You're forgetting the cost of fraud.

This link is to a long but quite current article about those costs.
http://www.kansascityfed.org/Publicat/Econrev/pdf/10q2Sullivan.pdf

For example, you'll see a 2006 estimate of 5.4 cents lost to fraud just for card issuers for each $100 spent. On page 25 you'll see the losses broken down by credit/debit & debit access type.

The $5 fee isn't being charged for ATM use - just for use of the card to buy something, and that's because banks are better able to control losses from ATMS.

There is an additional source of costs not shown in this report - banks incur pretty high costs involved in maintaining fraud control programs and reissuing cards, etc.

Your financial advisor knew what he/she was talking about. The current max interchange fee is 21 cents plus 5 basis points, but there is an additional adjustment for fraud control expenditures:
http://www.federalreserve.gov/newsevents/press/bcreg/20110629a.htm

Small issuers are exempted, which is one reason why most CBs and CUs aren't having to do this:

In accordance with the statute, issuers that, together with their affiliates, have assets of less than $10 billion are exempt from the debit card interchange fee standards. To assist payment card networks in determining which of the issuers are subject to the debit card interchange fee standards, the Board plans to publish by mid-July and annually thereafter lists of institutions that are above and below the small issuer exemption asset threshold. Also, the Board plans to annually survey the networks and publish a list of the average interchange transaction fees each network provides to its covered and exempt issuers. This information should enable issuers, including small issuers, to more readily compare the interchange revenue they would receive from each network.

Small issuers have always had higher costs, though. They mostly compensate by being hyper-careful about to whom they issue cards.

[OnyxCollie]

58. I stand corrected regarding interchange fees.

I'm not about to sing the praises of Bank of America, however.

These are not nice people doing nice things.

[Yo_Mama]

62. I would encourage anyone to at least maintain some banking relationship with a CB or CU

Consolidation in the industry is a huge problem - in the long run it is going to really hurt the economy. Look at how the number of banks is falling:


The worst mistake the US ever made was to repeal Glass-Steagall. It has brought us nothing but bad consequences. And boy, was that a bipartisan deal. The Clinton admin pushed for it from day one, and the GOP was more than happy to aid and abet them.

You have to have good small banks to fund small businesses - the big banks operate with more centralized control and just aren't reliable sources for small communities to get funding.

The more of the small FIs we lose, the more power the big banks gain and the greater the impact of their judgmental errors.

[Lucian]

32. Why are people still banking with those greedy assholes?

[blueamy66]

37. because it's a pain in the ass to move accts.

have my EFTs moved, get new checks, new cards....and they've always been good to me....

[proud2BlibKansan]

44. Because if your credit is less than perfect you can't open a new checking account

I have several friends and family members who are unemployed or have gone through bankruptcy and have been refused a checking account at a credit union.

There are also people who have had good experiences with BoA and don't want to leave them.

[GreenStormCloud]

63. Because five dollars a month is a trivial expense. N/T

[shanti]

34. the $5 fee

just another way to stick it to the people.

[Warren DeMontague]

45. 5 bucks a month??? fuck that noise.

get a new bank.

[lib2DaBone]

50. Why do people do business with BOA? Why not join their local credit union?

:shrug:

[blueamy66]

51. because their hours suck and there are limited ATMs

and it's a pain in the ass to change my EFT to another bank

[SugarShack]

55. My CU is closer than the bank, they closed one nearby. Open til 5:30 every day and Sat til 1 ! !

[blueamy66]

57. maybe I'm just lazy

nt

[dd2003]

53. Disagree with 1 point

It's not like they need the cash.

http://www.nytimes.com/2011/10/25/business/banks-floode...


Actually... they do need the cash.

[Hugabear]

59. In other words, fuck the poor.

fuck BOA.