Add First Tennessee Bank and Bank of America to the growing list of financial institutions scrapping monthly fees for making debit card purchases a development being hailed by consumer advocates as a victory for customers.
First Tennessee Bank will not be charging customers to use debit cards, becoming the latest bank based in Tennessee to turn back from its plans to impose monthly debit card fees. The banks proposed fee of 4 cents per debit card transaction up to $3 a month was slated to start later this month.
Meanwhile Bank of America dropped plans for a $5 per month fee when customers use debit cards to make any purchases in a given month.
The twin announcements follow news that Regions Bank, SunTrust, Wells Fargo & Co. and JP Morgan Chase will be scrapping their planned or existing debit card swipe fees.
The about-face comes as customers petitioned many of the banks, and mobilized to close their accounts in some cases and take business elsewhere.
First Tennessee contended its customers werent upset by its fee structure, but the bank abandoned debit card monthly charges to stay competitive with other institutions, said Dave Miller, head of consumer banking.
Anne Pace, a spokeswoman for Bank of America, declined to say whether the company experienced a spike in account closures since announcing plans for its debit card fee in September.
But in a statement Tuesday, Bank of Americas co-Chief Operating Officer David Darnell said the decision was based on customer feedback. Our customers voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so, he said.
Pace added that a changing competitive marketplace also played a role.
The retreat by the banking industry on debit fees comes amid growing public anger over higher bank fees.
When I heard about the fee, it was the last straw for me, said Molly Katchpole, a 22-year-old nanny who started the online petition urging Bank of America to drop the debit fee. Im living paycheck to paycheck and one more fee was just too much.
Katchpole said it was exciting that customers were able to sway a big corporation to rethink its decision. But she already closed her account a few weeks ago and said the banks decision wont win her back.
She plans to stay with her new community bank in Washington, D.C.
Other customers may be more forgiving.
Diane Abela, a 38-year-old Manhattan resident, said she had been waiting to see if Bank of America would back down on its plan before closing her account. I had a feeling if there was big outcry, they wouldnt go through with it, said Abela. Im unemployed and $5 makes a big difference. When youre working on a budget every week, its the last thing you need.
The wave of fee hikes had come into play as the industry adjusted to new federal regulations. In particular, banks in the past year have blamed their fee hikes on a new federal regulation championed by Sen. Dick Durbin of Illinois.