Skip to comments.Bank of America's Kingdom for a Fee
Posted on 10/04/2011 1:32:42 PM PDT by Kaslin
For want of a nail the shoe was lost; for want of a shoe the horse was lost; for want of a horse the rider was lost; for want of a rider the battle was lost; for want of a battle the kingdom was lost.
Is it possible after all the trouble Bank of America has found themselves in, the final nail in their coffin will be a $5 per month debit card fee?
When Bank of America acquired Countrywide Financial the pundits said it was a match made in heaven.
Well, I sure hope heaven never looks like this.
From robo-signings to subprime chaos, the acquisition trail has proven much more harmful than good.
TARP provided temporary relief; however, it also exposed the inadequate capital dilemma that BAC and others banks experienced, all as the credit crisis surged rapidly forward.
Sales of worldwide credit card divisions and prior foreign bank acquisitions gave some relief to the capital pressure, but apparently, not enough help.
As lawsuit upon lawsuit mounted from attorney generals, counterparties, and individuals, the pressure for action continued.
Yet, analysts were unrelenting in pronouncing a buying opportunity as the stock fell lower and lower. It was hinted the powers that be would never allow BAC to go below $5.
That price would create all sorts of holding requirements, so it would never happen, so they say.
Sale of assets offered one solution to the problem, and, of course, management changes presented yet another way out.
Still, there was no relief in sight.
Finally, as if everything else was not enough, another predicament arose.
According to the Fed, debit card transactions could no longer be charged $0.44 per transaction; it needed to be reduced to $0.22.
Facing a 50% loss of income, BACs solution was to impose a $5 monthly fee for utilizing the card, even if it was only used once per month.
Needless to say, it seems that customers were not annoyed or worried by the subprime mortgage shenanigans, multiple lawsuits, or even the liquidation of prime assets. However, when it came to reaching into their pockets for a monthly fee, customers were totally outraged.
This anger could result in a mass withdrawal of deposits, the last thing Bank of America either expected or desired.
As reflected by the current stock valuation, BAC is skating on very thin ice.
The last thing they need is a bank run created by their own greed and stupidity.
Before they acted they should have read the poem For Want of a Nail.
Bank of America would have learned the final result is loss of a kingdom
Dick Durbin’s hypocrisy aside, BofA was asking for a backlash and has long deserved one.
Help me understand. I use my BofA debit card daily. Are they going to start charging me $5 per month?
BofA has also recently instituted a $5 fee to replace debit cards, which I found out the hard way when my card developed read errors.
Yes, they are
This article nicely captures what I feel is the one Wild Card still riding out there this election cycle.
The high potential for an explosion of populist anger, directed at the banks.
We almost saw it three years ago, after the bailouts. The public instead put their trust in Obama, and Obama covered the bankers’ arses for them.
This country has a populist melt-down over bankers on a cyclical basis. We are far overdue for one.
Plus the banks are very stupidly playing into the hands of that with all of their decisions outlined in the article.
Durbin’s little misadventure is, I feel, a trial balloon to see how successful Obama and the Democrats could be if they decided to run against the banks.
If they decide not to do so, I think the odds of a third-party charlatan jumping into this race and deciding to to it are extremely high.
The far-left NDP party in Canada surged from 4th. place ton 2nd. largely on a promise to re-regulate credit card interest rates.
I personally know too many people who would vote for Hitler reincarnate if his platform was to limit CC interest to 15%, ban ATM fees, force banks to take cramdowns on mortgates, forgive some student debt, etc.
I am shocked Freepers use BOA... The same bank that allowed illegals to funnel money to Mexico. I cannot quite remember the story, but did remember it when shopping for a bank. BOA may even be backing the DNC convention in CLT. That would be Gov “suspend elections” Bev Perdues state.. I know we cannot completely stop doing al biz with commie corps, but I remembered this and chose a diff bank. Maybe the lost revenue from illegals leaving our broken country was too great.
I wouldn’t bet on it.
From what I can tell this only applies to accounts that have low average balances and already have fees. If you keep enough money in the account so it is “free” I seriously doubt they will charge us for debt card use. I know they never have before.
Instead of a flat $5 fee, why don’t they just throw out something like a dime per usage? It would have been a lot easier to swallow. I put everything on my USAA credit card and get 1.25% as cash back in January. I got $1000 last year.
Not exactly. BofA has already said that their plan is intended to shed depositors with smaller accounts who "use a greater share of the bank's services".
Maybe so, maybe not. As a former BofA customer, I hope that they critically wounded themselves this time.
They "earned" it - to coin a phrase!
From what I remember, you have to have $6000 or more in your chequing account to avoid the fee.
Considering that most chequing accounts pay extraordinarily low interest, I doubt any sane person would keep that kind of money in a non-productive account.
They *were* charging $0.44 per transaction, but the Durbinator et al forced a reduction to $0.22 per transaction. The $5. fee was a reaction to the loss of 50% of their income stream from debit card transactions.
As you can tell from the responses so far, the answer is a resounding "maybe".
The charge will only apply to certain accounts, and it will depend on your individual banking setup.
Personally I recommend using cash back rewards credit cards - of course, it depends on individual preference.
“Are they going to start charging me $5 per month?”
Maybe. Depends on your balance. Here’s a suggestion: instead of worrying about it, just switch to a credit union instead.
I hate agreeing with little dick durbin, but even a blind and deaf squirrel gets a nut every now and then. This fee is dumb, and Bof A likes nickel and diming it’s customers. You can do better elsewhere.
I guess that Bank of America is behind in their contributions to the democrat party and obama’s stash fund.
This is nothing more than blackmail.
Durbin is out threatening BOA. BOA “contributes” campaign cash to obama. Threat goes away. Until next week when the dims threaten them again.
Protection racket. obama style.
Chuck Schumer caused a run on IndyMac when he leaked a letter he’d sent to regulators saying the bank was insolvent. After IndyMac collapsed George Soros was one of the buyers.
Sure -- he's bought and paid for. It's the Chicago Way.
If you wanted to avoid this problem....what you could do is simply find yourself a cash card, via any number of institutions, and just load cash up on it. You avoid the $5 monthly fee. The positive side is that you limit your continual spending and you know on the first of the month that you’ve got X amount of money on that cash card to spend. The negative is that you might actually overspend...and suddenly have to whip out your credit card to cover something.
Or you could go back to old-fashioned cash, and just carry $600 around in your pocket on the first of the month.
The bottom line is that you can avoid the $60 a year, if you really want to skip it. If you think about it....it was just twenty years ago that you carried cash around for purchases, and credit cards were usually for big purchases. That’s how much we’ve changed in two decades.
I don't use debit cards.
As long as one is a disciplined spender, might as well use credit cards, get 1% or 1.5% cash back, and auto draft your monthly credit card bill. Of course, there is a psychological impetus to spend more with a credit card, or carry a balance, so that plan is not for everyone.
Regardless, there will likely still be some banks who do not charge for debit card use or have easy-to-meet thresholds.