Bank of America will begin charging customers a $5 monthly fee in 2012 to use their debit cards for purchases.
There is widespread hostility toward new fees charged by some of the nation’s largest banks and Community banks and credit unions are moving quickly to take advantage of that.
Co-op Services Credit Union of Livonia, Mich., will give $105 to new customers who shred their old debit cards and open new accounts with direct deposit. The credit union launched the campaign after Bank of America said it will charge customers $5 a month to use their debit cards for purchases.
Other efforts to capitalize on the backlash against big banks include:
•Renasant Bank of Tupelo, Miss., has been running ads in several Southern cities with the headline: “Does your bank charge for debit cards? We don’t.”
Bank officials hope that outrage over new fees will overcome consumers’ historical inertia when it comes to switching bank accounts. “It’s our window to get some deposits,” says John Oxford, spokesman for Renasant.
•FirstBank Colorado of Lakewood, Colo., recently launched an interactive campaign that encourages consumers to send a text with the name of their bank. FirstBank will then provide information on that bank’s fees. FirstBank is using the campaign to promote the fact that it offers free checking with no minimum balance, says Dave Baker, president of FirstBank.
•Randolph-Brooks Federal Credit Union of Live Oak, Texas, will give members 15 cents cash back for every debit card purchase made between Oct. 1 and Dec. 31. Ordinarily, the credit union gives 10 cents back for debit card purchases.
Traffic at the National Association of Federal Credit Unions’ credit union locator site has increased more than 200% in the past week, spokeswoman Patty Briotta says.
Banks that have raised their fees said a regulation that took effect Oct. 1 left them with no other choice. That regulation cut in half the fees financial institutions can charge retailers whenever consumers use their debit cards for purchases.
The regulation exempted banks and credit unions with assets of less than $10 billion. Nonetheless, those institutions strongly opposed the “swipe fee” rule, arguing that the exclusion wouldn’t work.
In a statement, NAFCU said its members will try to maintain services without raising fees, but added, “Clearly, we are not immune to market forces.”
While small banks and credit unions may postpone raising fees, says Robert Hammer, chief executive of banking consultant R.K. Hammer, “the pressure to raise fees will be there.”
Photo credit: Retirement Finances
Via USA Today