Just months after announcing a new $5 monthly charge for debit cards, Bank of America Corp. caved and eliminated the charge after an onslaught of complaints from customers. But will Boston University students still remain loyal to the popular Bank of America – or will they take their money elsewhere?
School of Management senior Patrick Moriarty said he values his relationship with Bank of America despite the fee fiasco.
“I wouldn’t switch into any other banks even if Bank of America wants to charge me the monthly fee,” said Moriarty. “I don’t trust my money in smaller banks or credit unions. Plus, it’s not like that you can just walk into another bank and have your account switched. It’s not that simple.”
College of Arts and Sciences senior Elizabeth Crow said she believes that Bank of America’s wide network will ultimately save the company.
“I haven’t thought about switching at all. I knew that Bank of America is one of the major topics in the Occupy Wall Street movement. And I sympathize with the people in the movement,” said Crow. “It’s just that back at home in Texas, Bank of America is everywhere. It has a really strong presence over the nation. I didn’t know there is a Citizens Bank before I came to BU. And my parents both use Bank of America as well.”
School of Education junior Ashleigh Levy said Bank of America’s multiple locations on Commonwealth Avenue are too convenient to miss out on.
“I used to use JPMorgan Chase but I switched into Bank of America as I came to BU,” said Levy. “It would be really inconvenient if I kept the Chase account because there is not a single [Chase] ATM around campus.”
When asked if she would close her Bank of America account if she started implementing the monthly fee plan, Levy said no.
“There are always ways to avoid the fees,” she said. “You could always withdraw money from the ATM at GSU and use cash.”
Collier echoed the sentiments of others who said that switching accounts between banks is difficult.
“It is not that easy to switch into a new bank. Big banks like Bank of America always set up services like online banking or ATMs to prevent the customers from switching,” he said. “The customers will eventually stick to using Bank of America because the switching cost is too high.”
Banking on more cash
Bank of America announced on Sept. 29 that the company would begin charging customers $5 a month starting in 2012 for using debit cards to make purchases.
This is becoming a common move among banks, said CAS economics professor Bruce Watson.
“In the past years, fees from debit cards have provided significant revenue for American banks,” said Watson. “This revenue is reliable and it comes easy.”
Gregory Collier, SMG strategy and policy professor, explained another potential reason why Bank of America wanted to enact a new charge.
“The consumer behavior has changed so much in the recent years,” said Collier. “More and more people choose to use debit cards today. By implementing this ‘penalty payment’ to the debit card users, Bank of America probably expected consumers to switch back into using credit cards.”
This would yield even greater revenue for the bank.
“The interest payment would be way higher than $60 a year,” he said. “Bank of America expected people to follow instead of retreat but clearly they miscalculated the market.”
The consumer backlash
The fee flared a firestorm of customers’ criticism. According to ABC News, a Washington, D.C. resident launched an online petition calling on Bank of America to repeal its $5 fee. Just a month after starting the petition, the website boasted 300,000 signatures. The news even drew criticism from President Barack Obama and helped spark “Bank Transfer Day,” which urged customers to close their Bank of America accounts by Nov. 5.
Facing the customer outcry, Bank of America began softening its stance last week.
“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” said David Darnell, co-chief operating officer at Bank of America, in a statement. “As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”
“It’s a sign of consumer power in action,” said Norma Garcia, manager of the financial services program for Consumers Union. “This is a sign of the marketplace working.”
Competitors such as JP Morgan Chase and Wells Fargo also dropped their plans their debit fee plans last week, according to ABC News, leaving Bank of America the only major bank still planning to charge the fee.
According to The Associated Press, Anne Pace, a spokeswoman for Bank of America, declined to say whether there was a spike in account closures following the September announcement that it would start charging the fee early next year. Even so, BU students acted accordingly.
CAS sophomore Edward Samson said he felt betrayed by Bank of America.
“I have been disappointed with their customer service for a long time,” said Samson. “The $5 monthly fee announcement just made everything worse. I switched to the Sovereign Bank right after the announcement. I know [Bank of America is] scrapping the plan now but they are not winning me back.”
College of Arts and Science senior Alex Maramba said he is in similar situation.
“I’m from California and I used to use JPMorgan Chase before I came to Boston. I switched to Bank of America because it is really convenient here in BU,” said Maramba. “But with this announcement coming up, I am getting really disappointed. I am graduating very soon and going back to California so I can see that this relationship should be over now.”
To Collier, Bank of America’s strategy was off the mark.
“Bank of America clearly misjudged what consumers would bear,” said Collier.
This is an account occasionally used by the Daily Free Press editors to post archived posts from previous iterations of the site or otherwise for special circumstance publications. See authorship info on the byline at the top of the page.
Wonderful work! That is the type of info that should be shared across the web. Disgrace on Google for no longer positioning this publish higher! Come on over and talk over with my site . Thanks =)
I’m really inspired with your writing abilities and also with the layout to your weblog. Is this a paid topic or did you modify it yourself? Anyway keep up the nice high quality writing, it is rare to peer a great weblog like this one nowadays..