Bank of America CEO Brian Moynihan has said his bank’s new $5 fee debit card fee is justified because the bank “has a right to make a profit,” according to CNN Money.
Bank of America announced last week that it would begin charging customers $5 per month to use their debit cards for purchases starting in early 2012. Customers who only use their debit card to access ATMs won't be charged. Moynihan said the fee was necessary in order to have the "ability to be profitable" in a new banking environment with increased regulations, including a cap on the the debit card swipe fees banks charge merchants, according to CNN Money.
The debit card fee is one of a rash of other charges big banks are imposing on their customers allegedly to recoup losses caused by new regulations in the Dodd-Frank law -- legislation passed by Congress in the wake of the financial crisis. Citibank told customers via letters that the bank would start charging some account holders $20 for low balances. Wells Fargo announced in August that the bank would start testing a $3 debit card fee.
The Bank of America fee prompted criticism from almost all corners after it was announced last week. President Barack Obama told ABC News that banks need to treat their customers “fairly and transparently.”
"Banks can make money," he added in the interview. "They can succeed, the old-fashioned way, by earning it."
Senate Majority Whip Dick Durbin (D-Ill.) encouraged customers to leave Bank of America in response to the fees. Rep. Brad Miller (D-N.C.) said after the fee was announced that he plans to introduce legislation that would make it easier for customers to swap their direct deposit, automatic bill paying and other automated features when switching banks.
Ordinary consumers are also lashing out at the Bank of America fees. Debit card fees was a trending topic on Google the day after the announcement and users took to Twitter to and mock the bank. One woman in Washington D.C. gathered 137,000 signatures protesting the fee; she plans to deliver the petition to a D.C. branch on Thursday.
But not all of the reactions to the fee were critical. Banking industry officials said the new Dodd-Frank regulations forced Bank of America’s hand by changing the retail banking environment.
"As a direct result of the Durbin Amendment, consumers have started paying for financial services they previously enjoyed free of charge," American Bankers Association President Frank Keating said in a statement after Obama criticized the fee.