Bank of America Corp. is scrapping its plan to charge a $5 monthly debit card fee.
The bank’s decision to drop the fee came after a roar of customer outrage in recent weeks over the fee. Other major banks, including JPMorgan Chase & Co. and Wells Fargo & Co., already canceled tests of similar debit card fees last week.
SunTrust Banks and Regions Financial Corp. followed suit on Monday.
Anne Pace, a spokeswoman for Bank of America, declined to say whether the company experienced a spike in account closures since announcing the $5 debit card fee in September.
But in a statement Tuesday, Bank of America’s 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 about-face by the banking industry comes amid growing public anger over higher bank fees. A movement to get bank customers switch to credit unions — started by a Bank of America customer — had marked this Saturday as “Bank Transfer Day.”
A separate online petition asking Bank of America to cancel the $5 fee also had gathered more than 306,000 supporters this week.
“Consumers have the power to make the big banks back down from unfair practices if they raise their voices and vote with their feet and their dollars,” Norma Garcia of Consumers Union said in a release Tuesday. In the end, she said Bank of America understood that it risked losing too many customers.
Unlike Chase and Wells Fargo, Bank of America’s announcement that it would start charging customers a monthly debit card fee early next year had come without any testing in the marketplace.
Pace said the bank had made the decision based on internal surveys with customers. She declined to detail the nature of those surveys but said that in the past couple of weeks, “customer sentiment changed.”
The banking industry’s retreat from a debit card fee doesn’t mean customers aren’t seeing higher fees elsewhere.
This past spring, for example, Bank of America raised the monthly fee on its basic checking account to $12, from $8.95.
The Charlotte, N.C.-based bank is also testing a new menu of checking accounts with monthly fees ranging from $6 to $25 in Arizona, Georgia and Massachusetts. Pace said the pilot program is seeing “good results” and that the bank plans to move ahead with its rollout sometime next year.
Other smaller fees may be nicking away at customer wallets as well. In September, the bank instituted a $5 fee to replace debit cards, with overnight rush delivery costing $20. Both services had previously been free. Bank of America isn’t alone either.
Chase this year also doubled the fee on its basic checking account to $12 a month. But the bank says it will end a test in Georgia of a basic checking account that charged a $15 monthly fee.
And like many other banks, Wells Fargo ended its debit rewards program earlier this year.
The wave of fee hikes comes as the industry adjusts to new regulations. A rule that went into effect last month caps the fees banks can collect from merchants whenever customers swipe their debit cards.
Banks in the past year have blamed their fee hikes and pullback on perks on a new federal law championed by Senator Dick Durbin of Illinois. The law, which went into effect last month, caps the amount banks can charge merchants whenever customers swipe their debit cards.
JPMorgan has said it would lose $300 million each quarter as a result of the regulation; Wells Fargo said it would lose $250 million a quarter.