Bank of America drops $5 card fee

Bank of America wasn't the first large bank that planned to charge debit card fees, but on Tuesday it became the last to drop such plans.

"I guess I won't change banks, today at least," said Don Flowers, pastor of Providence Baptist Church on Daniel Island, and a Bank of America customer since 1986. "I was getting ready to go and switch."

Flowers, echoing the nationwide criticism the bank has faced, said he has been a good customer and thought it was unfair that it planned to charge him for using a debit card. He said he and his wife discussed switching from Bank of America over breakfast Tuesday, before the bank's announcement.

When Bank of America announced in September that it would charge customers $5 a month to use their debit cards starting in January, it was still the nation's largest bank and immediately became a lightning rod for criticism over new fees. (JP Morgan Chase became the largest bank, by assets, in October).

Nevermind that SunTrust started charging a $5 debit card fee in June, or that Regions Bank began charging a $4 fee Oct. 1. It was high-profile Bank of America that wore the bulls-eye, and despite criticism, from consumer advocates on up to President Barack Obama, the bank stuck to its plan even as rivals backed away.

Credit unions and rival banks with no debit fees welcomed new customers, and activists declared Nov. 5 to be "bank transfer day," when customers should switch banks to express their dissatisfaction.

It didn't seem to be about the small monthly charges, so much as the feeling that banks were acting with impunity.

"The public backlash over debit card fees should serve as a big wake-up call to banks that they can't arrogantly take their customers for granted," said Pamela Banks, senior policy counsel for Consumers Union, which set up a website where Bank of America customers could record break-up videos to the bank.

A survey in early October by Research Intelligence Group found that nearly a third of respondents would leave a bank that charged them a debit card fee, Bloomberg news service reported.

Another survey found that just 3 percent of consumers would continue using their debit cards if they had to pay a fee, American Banker reported.

The reason banks were considering the fees was to make up for billions they are losing because of new federal regulations. New limits on credit cards, overdraft fees, and the charges banks collect from retailers every time a debit card is swiped cut into banks' revenues.

Bank of America CEO Brian Moynihan, interviewed at a forum in Washington on Oct. 5 by CNBC's Larry Kudlow, said the bank's customers would "understand we have a right to make a profit."

But amid the bad publicity, some large banking rivals declined to follow Bank of America with debit card fees. Then, those that had announced debit fees reversed course.

Wells Fargo and Chase dropped multi-state test marketing of their $3 debit card fees Friday. SunTrust and Regions banks dropped their debit card fees Monday and promised refunds to customers for the fees already collected.

By Tuesday morning it was clear that the music had stopped, and Bank of America was the one left without a chair.

The announcement came out around noon.

"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," said David Darnell, co-chief operating officer. "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."

That's pretty much what the other banks said -- that they dropped the fees after learning that their customers don't want to pay them.

Reach David Slade at 937-5552, on Facebook or on Twitter at @DSladeNews.