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Bank of America’s Response to Durbin

September 30, 2011

New Monthly $5 Debit Fee

As expected another big bank announced new fees associated with debit card usage.  Bank of America recently announced a $5 per month fee for all customers who use their debit card—with exception to ATM usage and certain special accounts.  This new fee is similar to Wells Fargo’s Response to the Durbin Amendment, which was announced in August.

“Other banks have been flirting with the idea of introducing a fee for debit card usage, but Bank of America (BAC, Fortune 500) is one of the first major institutions to announce that it will make this a reality for active debit card customers.” – Blake Ellis, CNN Money

As discussed in the FMSI white paper: The Impact of Federal Regulations on the Financial Services Industry, banks are taking a huge hit to their revenue stream from the Durbin AmendmentCharging additional fees directly to the consumer was a concern opponents of the amendment had.  Time will tell how consumers react to this $5 per month charge.

How will community banks and credit unions respond—who are exempt from the Durbin Amendment (those who have assets less than $10 billion)?  Will we see a significant migration in the financial services industry or will consumers simply absorb these new fees?

Excerpts taken from the Blake Ellis CNN Money article Bank of America to charge $5 monthly debit card fee

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