In one of the most rapid reversals of a market strategy ever witnessed, Bank of America announced today that they will be eliminating their new $5.00 debit card fee. This action caps a week of intense activity among the top debit issuers in the country as one after another clawed back fees directly tied to debit card usage at the POS.
What’s to be learned from all of this? Perhaps one lesson is the fact that there are thousands of financial institutions in the United States and consumers have a choice of where they do their banking. Another might be that the best fee structures are those that allow consumers to make a decision based on value rather than avoidance. Regardless, as retail banks and credit unions consider new fee structures in the future; this is one test whose result is now in the history books.
Anne Pace, a spokeswoman for Bank of America, declined to say whether Bank of America’s announcement of the new debit card fee had led to a spike in account closures. She said the decision to scrap the fee was based partly on a “changing competitive marketplace.”