published Wednesday, November 2nd, 2011

Bank debit card fees fall like pins

FORESWEARING DEBIT FEE

* First Tennessee

* Bank of America

* SunTrust

* Regions Bank

* Wells Fargo

* Chase

First Tennessee and Bank of America joined SunTrust, Regions Bank and other rivals in rolling back the unpopular debit fees that trace their lineage back to the Durbin Amendment of the Dodd-Frank Act.

“Given the fact that the competitive market has changed, we are canceling the implementation of the debit card fee,” said Jack Bradley, executive communications manager for First Horizon, the holding company for First Tennessee.

Keith Sanford, market president for First Tennessee, said the decision wasn’t a concession to popular protests that were spurred by the fees, but instead was an acknowledgment that First Tennessee couldn’t stand alone when its competitors had eliminated the monthly fee.

The industry estimates that the Durbin Amendment, which slashes in half the amount banks can collect from merchants in swipe fees, will cost banks $6.6 billion, said Sanford, and will punch a $10 million hole in First Tennessee’s budget.

“We still have to make up for the the losses from the Durbin Amendment somehow,” Sanford said. “Right now, it’s just going to be a hole in our budget.”

First Tennessee announced the rate hikes in September, charging customers up to $3 each month if they used their debit card. According to the bank, the fee was needed to pay for fraud losses that banks say they absorb instead of retailers.

Bank of America had already announced tens of thousands of layoffs to cut costs in addition to the $5 fee, but on Tuesday gave in to customer opposition.

David Darnell, co-chief operating officer of the Charlotte, N.C.-based bank, said the company had reversed its earlier position in response to customer feedback and the changing competitive marketplace.

“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” Darnell said. “As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.

“Client preferences”

The duel announcements came the day after two other major players in the banking arena backed away from the hated debit card fee — SunTrust and Regions.

Those decisions, in turn, followed similar moves last week by Wells Fargo, Chase and other banks to end new debit fees.

“We have heard from our customers and are responding to their feedback by eliminating the monthly fee for CheckCards,” said John Owen, head of consumer services for Regions Bank, which plans to refund CheckCard fees already incurred.

Brad Dinsmore, who heads consumer banking and private wealth management at SunTrust, said the bank “recognized the importance of responding to client preferences.”

Banks experiment

Many of the smaller banks in the Chattanooga area didn’t fall under the Durbin Amendment, and as a result weren’t forced to raise cash to meet the shortfall created by the law.

But for those who still must fill a hole that measures in the millions or, in J.P. Morgan’s case, $1.2 billion, consumer advocates caution consumers to watch out for replacement fees.

This past spring, for example, Bank of America raised the monthly fee on its basic checking account to $12, from $8.95, according to the Associated Press. The bank is also testing a menu of checking accounts with monthly fees ranging from $6 to $25 in select states.

Other, smaller fees may be nicking away at customer accounts as well, the AP reported.

In September, the bank instituted a $5 fee to replace debit cards, with overnight rush delivery costing $20. Both services had previously been free.

Chase and Citi also hiked fees on their basic checking accounts this year, to $12 and $10, respectively. Chase said it will end a test in Georgia of a basic checking account that charged an even higher $15 monthly fee, however.

And like many other banks, Wells Fargo ended its debit rewards program earlier this year.

The Associated Press contributed to this story.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
GlacierClipper said...

Dodd and Frank should have been throw out of office for other issues. The two individuals are a disgrace to the U.S. House of Representatives, people that keep voting these two stupid idiots back into office are investing in a worthless cause.

November 2, 2011 at 12:12 a.m.
Astropig said...

“We still have to make up for the the losses from the Durbin Amendment somehow,” Sanford said. “Right now, it’s just going to be a hole in our budget.”

Why can't your shareholders take a bullet ,Mr.Sanford? Because if you run off all of your customers, your shareholders will be wiped out completely. Maybe the owners of your company should wake up and realize that maybe you're not doing such a crack up job of managing their investment. Maybe, just maybe, one of these days they will read a proxy statement and realize that your CEO took two and a half million bucks last year to run the company into the ground.It should be dawning on them that the people that they have hired to watch their investment don't know squat about what should be an easy business.

Banks have just become another entitled, rent seeking usury machine that believes that they are owed something by society.

Sheesh, are you stupid, corrupt or a pleasing emulsion of both ?

November 2, 2011 at 8:29 a.m.
Walden said...

Pig- Your comments betray your utter ignorance of how business and the real world work.

Why can't the shareholders take a bullet, you ask? Well, primarily because they would take their toys and go home, you stupid fool. Smart businesses are in the practice of attracting investors by providing them with a reasonable return for their risk. They are not in the practice of actively disappointing their shareholders and causing them to take hits (or bullets as you say).

Now, regarding fees and why they accrue to customers, and not shareholders... The banks, like many other types of businesses, provide a good, or a service, in return for payment. I probably shouldn't ask someone like you this question, but would you expect to go to the grocery store and plop a loaf of bread or a six-pack up on the counter and be told, "It's on us buddy...". A reasonable person certainly wouldn't, but I guess you would.

Banks take in deposits, and make loans. This is their primary function. On both sides of this equation, banks take tremendous risk. When you bounce a check (which I would imagine is weekly in your case) you are basically making yourself an unsecured loan, and the bank stands to lose every penny over and above the balance in your account. When a bank makes a loan, despite its due diligence in analyzing the creditworthiness of the borrower (in your case zero I am sure), the bank stands to lose nearly every penny of the amount loaned if the borrower defaults.

You see, this is called risk. And banks expect (and DESERVE) to be compensated for this risk. If they are not, then why on earth would they agree to take deposits or make loans (both are functions, by the way, which are vital to the success of any economy, and all people rich or poor, black white or yellow benefit from these services).

So, instead of criticizing Mr. Sanford or any other banker, why don't you get down on your knees and thank the Good Lord Almighty that we have these institutions, and that they are willing to continue providing these vital services at such ridiculously low margins??

November 2, 2011 at 10:31 a.m.
Astropig said...

No. Stupid comment. These banks exist because we bailed them out. Your ignorance is monumental.

You obviously don't understand modern banking. Your comments reveal that. Banks used to make money making loans. When they did, they at least pretended to look after how those loans were used. Today, banks attempt to make money with opaque pricing schemes using fees and surcharges that attempt to trick customers into paying for things that they neither want or need. (Opt in to ripoff overdraft fees for example)

Banks at one time had some tangential connection to the communities that they served. Today , they are not a whole lot better than the title pawn places (many of which are actually owned by big banks by the way)that prey on their customers.

The biggest welfare queens in this nation are not living in a ghetto someplace.They are chauffered to Wall Street every day and that includes the schmucks that run First Horizon Corp. thankfully, they have been checkmated nit by some dictator in Washington,but by their customers rebelling against their usurious practices.

You want to talk risk ? Okay. Do you see any risk in borrowing our childrens and grandchildrens moneny to hand to these giant banks so that they can hand out bonuses to the very people that ran them into the ground ? Of course you don't.

I am down on my knees thanking the good Lord that these people are finally being brought to heel by the marketplace. They have become an arrogant law unto themselves. They get our money to invest risk free (if they lose it, the government bails them out)pay us nearly nothing,and then they turn right around and lend it to that same government and make a risk free profit of 2-3 %. And if they still fail ? We get to take the bullet as taxpayers.

We customers won this battle. The fight is not over, but it sure feels good to win one.

November 2, 2011 at 11:08 a.m.
Walden said...

Pig - just curious, do you consider yourself conservative or liberal? Serious question...

November 2, 2011 at 11:15 a.m.
Walden said...

Pig - by the way, the bank bailout was largely funded through TARP loans to banks, which by and large the Guvmint has been repaid on (with interest by the way). When you talk about risk associated with mortgaging our children's and grandchildren's futures, you need to be mad at the entitlement state and the so-called stimulus plans of the Obama administration, not with the bank bailouts.

November 2, 2011 at 11:18 a.m.
Astropig said...

Walden- Who do you think provided the TARP money ? Let's review...

It wasn't China. It wasn't Europe It wasn't Japan It wasn't Wall Street. Getting warmer...Almost there. It was... The taxpayers of this country. The people that work hard and have no special clout with the government bailed these people out. Some worked a couple of jobs to make ends meet and the banks took their money and handed it to the same people that ran their companies to ruin.

You are just not happy that some folks are finally tired of this corporate socialism and have stood up. You're not defending real capitalism. You're defending crony capitalism. Crony Capitalism is the sworn enemy of real capitalism. Because in real capitalism, banks would fail, shareholders would be wiped out and the surviving banks would pick up the business.

You're fine with socialism as long as the money goes to the right socialists.So no matter what party I'm simpatico with, you, my friend, are a socialist.

November 2, 2011 at 11:34 a.m.
Walden said...

Pig- This just gets richer and richer. What part of "the TARP was repaid to the Government" do you not understand. The taxpayer got their money back, with interest, on this one. Calling me a socialist is just too much to even respond to. Have a goodun!

November 2, 2011 at 12:40 p.m.
Astropig said...

Walden- What part of "we shouldn't have to bail these losers out of their reckless stupidity" do you not understand ?

Of course, if you feel (as you say) that these guys are entitled to whatever they can grab, then here's a homework assignment for you:

Find a bank with the highest fees that you can.Open an account with that bank. Then you will be properly paying these people for their services.

What, not gonna do it ? What's that you say ? Other banks and credit unions don't charge high fees to reward upper management ?

You wanted to know my political persuasion?

I guess you could call me a member of the Anti Socialist/ Anti Hypocrite party.

Thanks, Comrade !

November 2, 2011 at 12:58 p.m.
Walden said...

Pig- McDonald's called. They need their fry guy back. Now pack up your tent, leave the drum circle, and head back to work.

November 2, 2011 at 1:11 p.m.
Astropig said...

That would at least be an HONEST living. You apparently despise people that earn their money with their hands,back or brains, as opposed to their connections.

November 2, 2011 at 2:36 p.m.
Walden said...

Yeah Pig, you figured me out. I hate industrious, honest, hard-working people.

November 2, 2011 at 3:02 p.m.
Astropig said...

That was obvious from your first ignorant rant.

November 2, 2011 at 3:06 p.m.
Walden said...

Have a good life Pig. I mean, how could you not, because you spend your time angry at the world and coveting other people's possessions. I hope things improve for you, I really do. Good luck getting that permit to camp out at Ross' Landing.

November 2, 2011 at 3:27 p.m.
Astropig said...

There is no dignity so complete, nor independence so absolute as honest work. I invite you to experience it at least for one day. You'll thank me.

November 2, 2011 at 5:52 p.m.
Walden said...

Pig- I agree with your first sentence in your 5:52 post. You have no basis to assume I haven't done "honest work." I have done everything from work on a road crew, to stocking grocery shelves, to selling Christmas trees on a cold, rainy lot -- to various jobs in the white collar sector. I firmly believe in hard work, and I intend to instill this value in my children. Your presumption that white collar work, corporate work, or banking work in particular cannot be honest is silly at best.

November 2, 2011 at 8:26 p.m.
hcirehttae said...

Wow! Both of you guys posted back and forth right through the work day. I wonder which client was getting billed for all that time spent "ranting" at either end of the megaphone? I call it a draw between the Great Unwashed and the Upper Crust, both of whom can apparently multitask awesomely. Doncha love the internet???

November 2, 2011 at 9:46 p.m.
Walden said...

eattherich - draw? don't think so. By the way, I don't bill clients hourly.

November 2, 2011 at 9:55 p.m.
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