CUs Encouraged to be Cautious With Pricing as Banks Tack On 'Quiet Fees' (Misc News: November 16, 2011)
It seemed like a victory for consumers: in the face of overwhelming criticism and customer outrage, Bank of America backed away from its plan to charge a $5 monthly debit card fee. Other big banks have also rescinded their plans to implement new fees as well. Between the public outcry and the hundreds of thousands of customers who packed up their savings and came over to credit unions, it may have appeared as though banks had gotten the message about fees. But it’s not that simple.
As credit union leaders predicted, it does not appear as if banks are going to stop slapping additional fees on their customers. After all, they still want to make up for billions of dollars in lost income from the debit fee interchange rules and continued low interest rates. They’ll just need to do so in a quieter fashion, or they’ll run the risk of another debit fee debacle. According to new reports, that’s exactly what’s already happening, as many banks have begun imposing quieter fees.
The New York Times reports that while the fee to use a BofA debit card is gone, replacing a lost one will cost customers $5 or $20 for rush delivery. U.S. Bancorp will charge 50 cents a check to deposit money with a mobile phone, while TD Bank will charge $15 per payment to have money wired to an account. And that’s just the beginning: from ATM use to paper statements and overdraft charges, experts expect these quiet fees to rise in the coming months. The article says, instead, banks are trying to quietly introduce new fees instead.
“Bank of America abandoned its $5 a month debit card usage fee in late October amid a firestorm of criticism. Yet, it more quietly raised the cost of its basic MyAccess checking account by more than $3 a month earlier this year. Monthly maintenance fees now run $12 a month, up from $8.95.”
David Adams, CEO of MCUL & Affiliates, said it’s never been more important for credit unions to be cautious when considering changes in fee policies.
“Recent missteps by big banks illustrate very well how sensitive the public is to banking fees,” Adams said, “and from an opportunity standpoint, credit unions have an unprecedented chance to really project the credit union difference in their pricing.”
Adams said the advantages that drove hundreds of thousands of people to credit unions last month will only become more attractive as banks tack on more fees.
“Free checking and debit cards. Free access to thousands of ATMs. Loan and savings account fees that are always, on average, better than banks. We need to continue to tout the message to our members and potential members that fees aren’t hiding in the fine print over here.”
According to a new study, the bank fee fallout could be far greater than previously thought. The management consulting firm cg42 predicts that $185 billion in deposits will leave America's 10 largest banks in the coming year, and that 10.3 percent of BofA's customers will defect in that time.