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Big Banks Blink on New Card Fees
WSJ ^ | OCTOBER 28, 2011 | ROBIN SIDEL

Posted on 10/28/2011 5:00:02 PM PDT by throwback

A month after Bank of America got pummeled by consumers and politicians for introducing plans for new debit-card fees, most other big U.S. banks are steering clear of imposing similar charges.

Following eight months of consumer testing, J.P. Morgan Chase & Co. has decided that it won't charge customers who use their debit cards to make purchases, according to a person familiar with the bank's plans. The New York bank's Chase retail unit is one of the largest U.S. consumer banks, with 26.5 million checking accounts and 5,300 branches.

J.P. Morgan joins U.S. Bancorp, Citigroup Inc., PNC Financial Services Group Inc., KeyCorp and other large banks that have said in recent days that they won't impose monthly fees on debit cards. None of those banks said they made their decisions because of the outcry over Bank of America's fees.

"We looked at all options and quickly decided it didn't fit with our overall strategy," said David Bowen, who runs the consumer-product business at Cleveland-based Key, which ranks among the 20 largest banks in the country.

Banks are loading fees onto customer accounts in an attempt to recover billions of dollars in revenue that will be lost from new restrictions on debit cards, credit cards and overdrafts. Most big banks have already eliminated free checking for customers who don't meet certain criteria on their accounts, such as minimum balances or a certain number of direct deposit transactions.

Bank of America Corp. has begun laying plans to charge millions of customers $5 a month if they use their debit cards to make purchases. The bank is still working out details of its plans, which likely won't affect all customers, according to a person familiar with the situation. SunTrust Banks Inc., Atlanta, is also tacking a $5 monthly fee...

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy
KEYWORDS: debitcard; durbin
Sen. Richard Durbin (D., Ill.), who wrote the provision which reduced merchant debit-card fees, sent a letter to Wells Fargo Chief Executive John Stumpf last week complaining about the bank's new charges. "It is certainly surprising that your bank would pursue this fee strategy in light of the consumer reaction that has been prompted by Bank of America's recent imposition of a monthly debit fee on its customers. If you were hoping that your new fee would go unnoticed, it has not," he wrote.

Now THAT takes a set! Take a chunk of an industries' revenue, and then stick your finger in their eye when they attempt to recover it. If I was a Republican in Congress, I'd be holding a press conference and calling Durbin names every day. Cowards.

1 posted on 10/28/2011 5:00:08 PM PDT by throwback
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To: throwback
My Visa card just raised my interest rate to 9.5%, despite the fact that I have excellent credit and despite the fact that they have a record of my dealings with them that goes back three or four decades and in the past two or three of those decades, I have not paid a penny in interest.

Maybe they thought (correctly) that they wouldn't lose me as a customer since I don't pay interest anyway, but then again, how does it profit them to raise my rate?

2 posted on 10/28/2011 5:15:45 PM PDT by Graybeard58 (Of course Obama loves his country but Herman Cain loves mine.)
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To: throwback
I'm always amazed at how many "normal" and successful people I meet who still don't understand that a bank is a business, not a public utility.

A thorough reading of Jose Ortega y Gassett's essay "Revolt of the Masses" is in order here.

3 posted on 10/28/2011 5:28:02 PM PDT by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: throwback

BOA was among the banks that helped put BO into office. They support leftist causes all over the place. I have no sympathy for them.


4 posted on 10/28/2011 5:33:47 PM PDT by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: Graybeard58

“in the past two or three of those decades, I have not paid a penny in interest.”

so why would they want you as a customer?


5 posted on 10/28/2011 5:36:43 PM PDT by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: throwback

I hope Regions Banks rescinds their monthly $4 use of debit card charge because NOW I’ll be going Cash Only.

I may also change banks if they don’t.


6 posted on 10/28/2011 5:45:54 PM PDT by HighlyOpinionated (I am Roman Catholic, US Citizen, Patriot, TEA Party Alumni, Oath Keeper, Voter, Auburn Fan!)
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"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Thomas Jefferson

7 posted on 10/28/2011 5:49:35 PM PDT by DJ MacWoW (America! The wolves are here! What will you do?)
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To: driftdiver

Because, somebody is making around 3% from the merchant, every time a card is used.


8 posted on 10/28/2011 5:55:44 PM PDT by jenbean
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To: jenbean

A lot of someones get a piece of that 3%. Unless he’s using the card for a lot of purchases they are losing money on him.


9 posted on 10/28/2011 6:03:15 PM PDT by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: throwback

Industries don’t have any guaranteed future revenue unless it’s customers are desperate or stupid. These big banks have no real reason to exist and so can’t afford to chase off their customers.


10 posted on 10/28/2011 6:42:55 PM PDT by freedomfiter2 (Brutal acts of commission and yawning acts of omission both strengthen the hand of the devil.)
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To: Graybeard58

My Dad’s credit is A1 and he never pays interest either and they raised his interest to 29.99% last year. Still pissed him off though.

He pays off the card every month, so you got to wonder what went into that decision.


11 posted on 10/28/2011 7:40:47 PM PDT by packrat35 (America is rapidly becoming a police state that East Germany could be proud of!)
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To: driftdiver

Wrong.

The banks all offered free checking and credit/debit accounts to people, making all their money on the back end, from the merchants who accept checks or credit/debit cards.The merchants paid fees to the banks, to process checks, credit and debit cards.Naturally, those costs are passed on to the customer.

What changed?
The government has stipulated the rates banks can charge merchants for transactions, and banks have introduced new fees to checking account members.

Banks are like insurance companies.

They charge fees to guarentee transactions, absent the exchange of cash.


12 posted on 10/28/2011 7:41:59 PM PDT by sarasmom (Rent a clue.)
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To: driftdiver

BoA was also one of the biggest supporters of illegals, but for some reason most here on FR rush to their defense nowadays.


13 posted on 10/28/2011 7:42:17 PM PDT by packrat35 (America is rapidly becoming a police state that East Germany could be proud of!)
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To: throwback

SunTrust is pulling the $hit on my wife’s special accounts and she is looking to move all her money to another bank now. She has 4 accounts there and they want to hit 3 of them up with new fees.

Her primary account would still be ATM free but they are going to charge another fee for the checking.


14 posted on 10/28/2011 7:44:24 PM PDT by packrat35 (America is rapidly becoming a police state that East Germany could be proud of!)
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To: driftdiver

My father literally pays everything on his VISA and then writes a check at the end of the month. They raised his interest to 29.99% last year. Why?

He is never late and they are making plenty of cash off him on merchant fees alone. Its just stupid.


15 posted on 10/28/2011 7:47:10 PM PDT by packrat35 (America is rapidly becoming a police state that East Germany could be proud of!)
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To: packrat35

Local banks here in TN are advertising NO fees on checking-debit cards even with low account balances. Get him to switch if he can.


16 posted on 10/28/2011 7:58:34 PM PDT by eyedigress ((Old storm chaser from the west)?)
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To: eyedigress

My Dad is in Florida and since he pays no interest, he is not really affected.

My wife is looking at moving her accounts in the next month after she gets some finances in order first to not screw up.


17 posted on 10/28/2011 8:16:05 PM PDT by packrat35 (America is rapidly becoming a police state that East Germany could be proud of!)
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To: driftdiver
so why would they want you as a customer?

Because I average charging $2,000 or more per month and they make about 3% on that from merchants fees.

I get 2,000 or so points every month accumulated.

18 posted on 10/28/2011 9:04:59 PM PDT by Graybeard58 (Of course Obama loves his country but Herman Cain loves mine.)
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To: Graybeard58

they make maybe 1%, there are a lot of middlemen in a credit card transaction.

1% of $2,000 is $20. It costs more than that to have you as a customer. Even if their profit is 3%, thats only $60. Add in those points and you are costing them money.

Again why would they want you as a customer?


19 posted on 10/29/2011 3:34:25 AM PDT by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: sarasmom

No I’m not wrong. Banks make a tiny amount on the transaction. They make most of their money on the interest.


20 posted on 10/29/2011 3:37:14 AM PDT by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: throwback

I believe a majority of Republicans voted for it as well.


21 posted on 10/29/2011 3:50:41 AM PDT by Nickname
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To: packrat35
They raised his interest to 29.99% last year. Why?

Have him check his reports at www.annualcreditreport.com. Rates get jacked to 29% for a missed payment, etc. There is likely to be some sort of blemish on his credit reports. The reports are free.

22 posted on 10/29/2011 4:21:55 AM PDT by EVO X
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To: Alberta's Child
A thought-provoking citation.... A thorough reading of Jose Ortega y Gassett's essay "Revolt of the Masses" is in order here.

Now, I'm tangled-up in slow-reading for the weekend.

Thanks for the stimulus.

23 posted on 10/29/2011 6:21:21 AM PDT by pointsal
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To: EVO X

Actually he keeps a check on his report and nothing bad turned up.


24 posted on 10/29/2011 6:38:50 AM PDT by packrat35 (America is rapidly becoming a police state that East Germany could be proud of!)
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To: driftdiver
Again why would they want you as a customer?

You'd have to ask them then, if you don't accept that.You say that they, at most make $20 per month off my transactions and it costs more than that to keep me as a customer. That $20 per month translates to $240 per year for decades.

25 posted on 10/29/2011 7:34:04 AM PDT by Graybeard58 (Of course Obama loves his country but Herman Cain loves mine.)
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To: packrat35

If it were me, I would call the CC Co. and ask WTF. Something isn’t right..


26 posted on 10/29/2011 8:21:06 AM PDT by EVO X
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To: Graybeard58

Not my claim, its simple math.


27 posted on 10/29/2011 10:12:26 AM PDT by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: driftdiver
Not my claim, its simple math.

I didn't say you made a "claim".

I showed you the "math" of how they have made thousand$ off my purchases over the past several decades, without me ever paying interest. You are determined to keep this going as shown by your replies that are argumentative in nature, when no one is arguing with you.

My simple statement is, that I have been a Visa customer since 1969 and I haven't paid any interest in probably the past 30 years or so.

I will say this, you may have the last word because people like you find it impossible to do otherwise. I'd bet the ranch on that and you may bet the ranch that I won't read it anyway, argue with yourself to your heart's content.

28 posted on 10/29/2011 4:54:03 PM PDT by Graybeard58 (Of course Obama loves his country but Herman Cain loves mine.)
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To: Graybeard58

I’m not arguing with you. I’m simply saying the bank is not making any money off of people like you.

I’m disappointed that you have turned insulting when there was no intent on my part. Too bad, I’ve enjoyed our conversations in the past. Now you’re just another ass on FR.


29 posted on 10/29/2011 6:04:47 PM PDT by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: driftdiver
You are wrong.

Banks make so much money on transactions, they even came out with new “incentive” programs a few years ago, targeted at purchasers.

Already charging vendors 3-5% for each credit card transaction, they then began incentives to increase credit card purchases, offering government agencies a 1-1.5 % kickback for making purchases via credit cards (P-Cards), as opposed to the normal standard of net 30 payment terms.

No, I don't think banks make most of their money on “interest rates”.
They make steady money on the volume of transactions between their “customers”, both the buyers and sellers of tangible products.

There is even a built in legal clause banks have engineered against merchants who already pay bank fees to process credit/debit cards.

No discounts can be offered for cash transactions.No premiums or handling charges can be made for credit/debit card transactions.

Banks, Insurance Agencies, Unions...are all related in the sense that they introduced a short term artificial financial benefit, that eventually became a long term burden to all commerce, and now pervades society.

I would guess your definition of “interest” and mine are not the same.

30 posted on 10/29/2011 6:54:40 PM PDT by sarasmom (Rent a clue.)
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To: driftdiver

If banks were making most of their money on interest they wouldn’t be sending me who pays no interest ever, new credit card offers (2-3 this week). Banks make money on the transaction fees and on the float - money they keep even for a day or two that they owe the merchants.


31 posted on 10/29/2011 7:05:15 PM PDT by Revolting cat! (Let us prey!)
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To: sarasmom; Revolting cat!

Do the math, even the 3% of $2000 is only $60 a month. But they don’t get the 3% because part of that goes to the card company (visa or mastercard) and part goes to the processor. It varies depending on the bank, merchant and processor but the banks generally get around 1%.

While they make a little off float, they also have to pay for the money you are using. There is a cost to the bank for the money you charge. In essence you are using the float instead of the bank.

On these types of transactions they make very little. In the past they’ve been focused on quantity of customers and not quality. With the reduced margins being forced by the govt they are going to start getting rid of the unprofitable customers.

So no, I’m not wrong. I am curious as to why you people are getting so incensed over a crappy socialist bank like BOA.


32 posted on 10/30/2011 4:07:44 AM PDT by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: driftdiver
I have no dealings with BOA.
SunTrust is trying to pull the same crap.
They raised the percentage rate for credit card transactions for merchants, and at the same time added fees for non-business customers.
Scheduled to begin Nov 10.

I will be switching my account to a credit union, and I am encouraging my “finance department” to explore other opportunities for our business accounts.

BTW-there is no “float” for my own transactions, and the vast majority of business transactions, except the “float” that the bank gets to play with.

NO, I am not a financial expert. But it's not difficult to follow the money, if you pay attention.

33 posted on 10/31/2011 7:41:17 PM PDT by sarasmom (Rent a clue.)
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To: throwback

As yours truly had perdicted!


34 posted on 10/31/2011 7:42:23 PM PDT by Revolting cat! (Let us prey!)
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To: Graybeard58

Bank of America just started charging $5 for a lost debit card.


35 posted on 10/31/2011 7:42:55 PM PDT by Politicalmom (I am intrigued and open to the Bush administration's amnesty proposal. -Rick Perry)
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