Bank of America Corp (NYSE:BAC) is implementing plans to levy a $5 monthly fee on debit card holders, seeking to compensate revenues lost due to a cap on what the bank could charge merchants for debit card transactions. The ceiling has been enforced by the government and takes effect on Saturday. Other banks (NYSE:KBE) are expected to follow suit soon, and Regions Financial Corp (NYSE:RF) will in fact charge a monthly $4 effective Oct 1.
Not surprisingly, Bank of America’s (NYSE:BAC) proposed action has consumers up in arms. “It’s just another way of gouging the customer,” said Alison Miller, a Bank Am customer in West Windsor, N.J. Regardless of backlash, consumers should expect all big banks — JP Morgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), American Express (NYSE:AXP) — to follow as the companies search for more revenues.
Sen. Dick Durbin (D-Ill.), who spearheaded the government move, said: “After years of raking in excess profits off an unfair and anticompetitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers. It’s overt, unfair, and I hope their customers have the final say.”
Nevertheless, banks (NYSE:XLF) need the fee-based income considering their losses on various free services and increasing restrictions on investment and trading activities.
Bank of America Corp (NYSE:BAC) is trading at $6.22 today, down 2.05%. Shares are up 51.53% in one year. The stock’s trading range for the year is between $6.00 and $15.31.