FORESWEARING DEBIT FEE
* First Tennessee
* Bank of America
* Regions Bank
* Wells Fargo
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.
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.”
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.
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, ...