Tennessean
November 1, 2011
Banks say customer feedback led to about-face; some customers still plan to switch to new banks
After customer discontent rose to a fever pitch, Regions Financial Corp. and SunTrust Bank on Monday scratched plans to impose monthly debit card fees, the latest in a spate of announcements reversing new fees.
“Consumers were ticked, and this is a short-term victory for consumers,” said bank analyst Bill Hardekopf, who runs LowCards.com. “But I would caution them that it’s not the end of new fees.”
Birmingham, Ala.-based Regions — the institution with the largest share of deposits in the Nashville market — announced last month it would start charging customers a $4-per-month fee when they made purchases with a debit card.
Monday’s policy reversal means customers who incurred the monthly fee over the past few weeks will have the money refunded to their accounts on Friday.
SunTrust, which has the city’s third-largest share of deposits, also on Monday nixed plans to continue its $5-a-month swipe fee, which the bank had introduced in June. Fees that were already assessed against customers’ accounts will be returned, SunTrust said.
Both banks say the reversals came as a result of “customer feedback.”
For Regions customer Bill Dobbins, 57, the bank’s sudden about-face to abandon its debit card fees won’t be enough to make him rethink his recent decision to switch banks. Dobbins is in the process of closing all his Regions accounts.
“For me, it’s too little, too late,” Dobbins said, adding that he picked a community bank that doesn’t plan debit card fees. “I don’t know what to expect from them,” he said of Regions. “So, that’s why I’m leaving.”
Other customers, however, heaved a sigh of relief at Regions’ fee reversal.
Regions customer Joe Lance, 42, of Chattanooga, said he was hunting for a bank with no debit card fees before the announcement. He welcomed the bank’s decision to drop the swipe charges, adding a note of caution.
“I’m glad to see they’re no longer pursuing it,” Lance said. “But I’ll continue to be on my guard and watch for new notices because they’re still on thin ice trying to make up lost revenues.”
Plans reassessed
The fee changes had been the result of last year’s Dodd-Frank financial overhaul legislation, which, in part, halved the amount that merchants pay to banks every time a debit card is used to make a purchase.
Regions had estimated the fee caps would cost the bank $170 million annually.
First Tennessee Bank, which was planning a debit card fee of 4 cents per transaction up to $3 a month beginning the end of November, said Tuesday it will not be charging customers for debit card use.
“We’re going to make sure our pricing remains competitive,” said Dave Miller, executive vice president of retail banking.
New fees likely, bank analyst says
Bank of America Corp., the second-largest bank in Nashville by deposits, said on Monday that it will be not charging customers for debit card use. The bank had planned to charge a $5 monthly debit card fee starting in January.
JPMorgan Chase & Co. and Wells Fargo, furthermore, plan to back away from their debit card fee tests that were conducted in several states.
Bank analysts predict that even if the lucrative debit card fees vanish altogether, consumers should look for other heavier charges to be tucked in other places.
“The new fees will probably be more subtle,” Hardekopf said. “Consumers should look for (more) increases in existing fees and raises in introductory rates on debit cards. There’s no question that there will be more fees on the way.”
