Card Issuing: BofA Introducing Additional Monthly fee Starting 2012
- As of 2012, Bank of America will start charging some current account holders five dollars per month for credit card service. This additional charge will be levied if a payment is made in the considered month. This new fee reflects the issuer’s revenue loss subsequent to the Durbin amendment, assessed at two billion dollars per year (6.6 billion dollars for all issuers).
- Wells Fargo and JPMorgan Chase are piloting likewise experiments in some states (with a three-dollar fee). Other regional banks are planning to opt for the same procedure. Bank of America, with the largest number of card portfolios, is, so far, the only bank to have generalised this measure. Indicators such as the account balance are being taken into account. The second US card issuer Citi has decided not to follow suit; yet, it will increase management fees for some checking accounts, with no relation to the debit card.
- Last minute: According to a press release issued on 1st November, Bank of America has eventually decided not to charge additional fees for debit card use. High media coverage and criticism on the part of their customers have talked them into stepping back (ex.: Bank Transfer Day on Facebook).
- Other banks have announced their decision to cancel similar measures: SunTrust, Wells Fargo and JPMorgan Chase for instance.
- Consumers’ discontent had fast spread through social networking websites making the US banks reconsider their position.
- The Durbin amendment, voted with Dodd-Frank Act reforming the financial sector in July 2010, has entitled the Federal Reverse to cap debit card interchange. The Fed has set this cap at 0.21 dollar (as opposed to 0.44 dollar before). To this fixed element must be added 0.05% of the amount and 0.01 dollar for fraud prevention measures. This reform has come into force on 1st October 2011.
- Not surprisingly, the US legislator has not prevented debit cardholders from being charged elsewhere. The US is increasing regulation on its financial industry and not trying to compensate for revenue losses. In relatively similar regulatory circumstances however (similar rates for euro cross-border payments: 924-2009 and 2560-2001-CE regulations), the EU Commission has made it clear it would ensure that imposed limits would not end up increasing charges, even indirectly.