BofA Introduces Debit Card Fees
It is really hard to figure out where it all went wrong. Once the synthetic product of America's two biggest banking dynasties, now an ass with a body attached. BofA was supposed to be the pinnacle of the banking universe. The ultimate evolution of a century of growth. Instead, it has gone to shit faster than Montezuma's Revenge.
Even though we like to think that IB is a world apart from the plebeian little ATM huts and teller storage lockers on America's streets, it is not. Investment banking is small town private banking on a global scale. It is sitting down with clients who want to save, invest and grow their asset base. Though Goldman Sachs is the populist pariah associated with the financial services industry, it is really Bank of America which continues to show everything that is wrong with the industry. From how to run a business, to how to (not) treat their customers. My apologies to all the Merrill guys doing their best to keep this Titanic flowing along, but when your parent company insists on killing itself you have to be ready for the bastard's treatment.
How the folks at BofA do not realize the tightness of the noose they are placing around their own necks is beyond my comprehension. I am one of the first to bang the "not on my dollar" and "this shit is about profits, damn it!" drums, but this is really just too stupid. Being a financial supermarket, it does not suit your interests to spit in the face of every customer who is not an elite member of your client base. Sure it is great to get that one person who buys up the entire chip and cookie aisles for their Super Bowl party, but it is the once a week buyers of single cartons of eggs and milk who drive your business.
Without ranting too much on this latest BofA somebody fucking kill me already public relations suicide attempt, here's a brief look back and forward:
Bank of America, ironically, started out as the Bank of Italy in 1904 when a gentleman by the name of Amadeo Giannini sought to provide loan opportunities to Italian immigrants in San Francisco. It would grown nationally until it was bought out by the Nations Bank of North Carolina in 1998, itself founded in 1874. The merger created a super banking behemoth the likes of which the world had never seen. The deal was orchestrated by Hugh McColl one of the greatest bankers in history and one that is sadly rarely mentioned on WSO. McColl handed the ship over to Ken Lewis, who quickly steered it into a fucking iceberg. The end...or so it should read.
Sadly, with the government getting involved and keeping this rotting carcass alive we can only expect more dumb to happen. These fool hardy decisions will be excused by bland allusions to Basel III and regulator intrusiveness. Those same regulators who not-so-long-ago saved this boat from capsizing.
Here's to Bank of America...finding new ways to fuck themselves and customers since 2008!
I am currently with Bank of America right now. I am looking to move my accounts after this. They are trying to find way too many ways to fuck me lately. Any suggestions on a new bank? I am West Coast.
I'm West Coast and just jumped to Wells Fargo. My Wife travels a lot to Houston, so we ended up with Wells because they have a decent foot print there. If you stay mostly west coast I heard Bank of the West is pretty solid.
FYI Wells and Chase are testing out $3 fees as well.
I never hesitate to criticize banks, but this is getting idiotic. You guys realize that BofA, Chase and Wells essentially have been providing a free service for years, right? Is an extra $3-5 dollars month so outrageous?
As for me, I will take my money out of Chase and put it somewhere else. Not becuase of the fees, but because I am a dick like that and I hope this becomes some kind of grass roots movement that finally bleeds out the big banks. So I suggest you move your money too.
SunTrust is doing it as well with $5 fees. I am actively looking to find a new bank purely because I refused to be dicked over by some small petty fee (and yes, i realize that makes me petty as well). Unfortunately, I think this is a new trend every bank will implement due to the limitations on other fees their recently 'endured'.
$5/month is a big deal to me. That's $60/year. That easily wipes out any interest income that you would have made on your combined checking/savings accounts at a brick-and-mortar bank.
Bank of America is really shooting itself in the foot on this one. The customers will simply move all of their deposits elsewhere. Have they learned nothing from the past few years?
I personally think that this reflects more poorly on the Durbin Amendment to Dodd Frank. They have decided to limit the transaction fees banks can charge retailers for debit purchases. Somehow, this was done in the interest of consumers, except all it really does is transfer these fees directly onto the consumer. What a bunch of morons...
Thanks, someone finally said it. Where does any any person get off telling private enterprise what they should and shouldn't charge? Why do people see no problem with the government fixing prices in banking?
I agree. Regulation is what spurred this. The government, yt again, thinks that people are too stupid to get the best price for their transactions. I'm not saying BAML is a bad guy, they HAVE to do it- else they lose money. But as long as institutions exist that don't have the monthly fee I will go there. Regulations are almost always bad IMHO. Especially the ones where the politicians have no idea what will occur because of them. (aka finance, environmental, business..pretty much everything outside of policy reforms)
http://abcnews.go.com/blogs/business/2011/09/bank-of-america-hits-debit…
Thank you Uncle Sam. Your good intentions have led us to hell once again. People have no clue that a company will do whatever it can to generate earnings. If you restrict one area they will add fees to another.
It also illustrates entitlement thinking. Debit cards, ATM's everywhere, banks open 7 days a week, etc are all costs that need to be paid for. This is no different.
@RECM and MBP
I hear you guys and obviously, Dodd-Frank is a crucial factor in the decision, $3-5 ain't shit and the little guy gets fucked, nothing new. My point, however, is about doing smart business. You don't need that $3-5 bucks if you are BofA, not at the cost of telling small time depositors "fuck you unless you got yourself a $20K minimum with Merrill Lynch". This is the type of shit the industry does not need. This is precisely the type of arrogant, short sighted, self fellatio bullshit that has those hipster jack offs marching and every unemployment collecting cocksucker refusing to go and get a paying job. This is simply a matter of smart business, bury the extra fees some place else. Don't be fucking lazy and ask to get fucked by people who are already drawing targets around your asshole and lubing up their arrows.
MMM, you have a way with words. I particularly like your last sentence...
Much obliged, sir. I did forget the no homo at the end, however.
I actually came back to WSO today after like 6 months to catch up on this very topic and see where others were thinking about putting their money. I have been with BofA for 10 years. Obviously 5 dollars a month isn't shit, but it is about principle at this point. You aren't going to charge me to use or access my money.
If anyone is interested, here is a topic I started last December that might come in handy here: //www.wallstreetoasis.com/forums/who-do-you-do-your-personal-banking-with
Currently I am trying to find loopholes to get into USAA. It is looking like I am going to have to wait until my fiancée and I get married. She has an account with them through her father.
Charles Scwab online banking baby. Good interest on the checking account, no ATM fees, brokerage, all in one package.
This is something I have been seriously looking into. Do you use this personally and how do you like it? You can see from the link I posted above that Captain K felt the same way.
Any real difference between ING?
@MMM- Yes, I agree. It's def poor business strategy. I get that they need the money, but the timing and execution is all wrong. I mean, they're not charging their wealthier depositors, but they're charging Joe-Random-Guy-Middle-class...idiotic. I think this highlights just how inept management is at the big banks.
It takes one check and one hour to take a $100 or $1,000,000+ account from BoA and put it into XYZ competitor.
Good luck getting a positive net return on this move BoA. Ugh. And I have an interview coming up with them, I hope they're going to hold together.
I use Ally, the online bank, so far I love it. Interest checking and higher interest rates on savings accounts. No ATM fees.
My other bank (I wanted one I could walk into and start a ruckus if need be) is a credit union in my area. No fees on anything, and higher interest rates than Chase, Wells, PNC, BofA, etc.
Fuck this shit. I use Chase and will certainly look for an alternative if they follow suit.
I have a Schwab brokerage and HSBC savings as well...I'm sure one of these or another alternative will provide free ATM services.
From what I understand, banks don't make money on the folks with low deposit balances. Essentially, they offer millions of people the ability to store their money, have access to it 24/7 via ATMs and online accounts, and the ability to use it to pay for goods. Previously, this made economic sense for banks because they could make money off the merchants who accepted the debit cards. Now that this is no longer the case, banks are attempting to make these customers profitable, or otherwise dropping them. Sounds like the right move to me.
You have a point, I am sure that from BofA's perespective this is a good strategy. But I think the negative backlash will outweigh whatever gains BofA expects to make.
BofA made 1.4B net income in its deposits business in 2010. Deposits traditionally is one of the more profitable segments for a bank, given its essentially cheap funding for all other activities. On the whole, customers with low deposit balances are Contribution Margin positive, but EBITDA negative after factoring in fixed infrastructure costs. The only reasons why these customers look "unprofitable" is because they absorb fixed costs that would still remain whether or not they are with the bank.
At the end of the day, banks are just screwing themselves competitively, since the "free" services they previously offered were supposed to be competitive in the market, e.g. "Bank with us cause we have the most branches, ATMs". Now, they're sending the message of, "oh wait, we can't offer this to you profitably, so we'll tack on fees previously". That just tells me whoever manages this business is an idiot.
While most consumers are probably too dumb or lazy to move accounts, you'll probably see more people moving to lower cost providers like credit unions and online banks. There are also a couple consumer-friendly super-regionals that are good options.
Who the fuck uses debit card anways?
Is this a joke?
no it's not a joke. I have never used my debit card except for deposit verification purposes. The only people I can think of who'd use debit over credit are international students who can't qualify for credit cards, or people who are too dumb to keep track of their credit card usage
what do you use to withdraw money from atms?
Actually, I have great credit with numerous credit cards and still use my debit card. I am american, not a student, and work in finance.
Really don't see your point. As a matter of fact, I don't think you do either.
Regardless, this thread alone should show that a lot of people use their debit card for one reason or another.
You don't see my point? Maybe because I didn't try to make one? I didn't think so many people actually used debit card. If people do, I stand corrected. Simple as that. I wasn't trying to persuade anyone to think otherwise.
It is indeed surprising to me that so many people seem furious about having to start paying $5. If it's the principle, adding ninja (although not really ninja at all) fee to the customers that's pissing people off, sure I get it. But from my point of view, this change doesn't affect me at all because I don't use my debit card. Hence, no fee to me. Obviously, this hints at more changes coming. For that, I am concerned. But not about this particular change. That's all.
I think at this point it is just most people being fed up with big banks, not so much the minimal fee.
Debit doesn't really have a point beyond getting cash. Debit offers less protection and offers fewer rewards systems (as far a I know). By the way, what's a PIN?
Fuck BAML, I am moving my account ASAP. I am not paying $5/mo for them to hold my money for me.
I actually put my Tank a Bank plan into action and moved all my money out of TBTF banks about a year ago. It took a surprisingly long time to make the move (I had accounts at BofA, Wells Fargo, Chase, and Citi). Now I use USAA almost exclusively, with a small account at a local credit union on the side.
Fuck the TBTF banks and all their bullshit.
According to WSJ article linked in original post, BAML's "...customers are projected to make $260 billion in debit-card purchases this year"
I guess some people use debit cards for purchases.
Citi is the only major retail bank at this point that will not be adding a fee to their debit card users. This could be a much needed profit boost if there is a run on the other depost banks.
I'm switching not only because of the fee but their website is down every week lately that it's ridiculous. I have an account with WF and their website is reliable and customer service beats BofA hands down.
I'm a big fan of HSBC's Premier account. It's a large minimum of $100k (or $50/month), but you can open online checking accounts in multiple countries and instantly transfer funds to be held in said country's currency. They have some pretty good ones too that would cost a big spread if you were to buy OTC.
FUCK..Well it seems after this move my bank Chase will also implement this bullshit. And if you guys think other TBTF banks wont do it, dont kid yourself. Fuck this shit.
BTW i know charles schwab and TD Ameritrade have banking,atm and brokerage all in one. Can someone recommend any other conglomerate with the same combo. Also HSBC 10k min account looks appealing as funds are not restricted.
Schwab works well. I use them for most of my banking. They refund all the ATM fees at the end of the month and you get interest on your balance. If you have an iPhone/Android you can deposit checks via your phone. I am not positive, but, I think you can deposit checks at local Schwab branches. For any thing that isn't direct deposited I have a local bank to deposit checks to, then transfer the amount to Schwab.
I haven't had any problems with them.
This is such a great example of unintended consequences and government interference (as mentioned above). Just like if you increase taxes on companies they will just pass the cost onto the customer. Unfortunately people think banks should just take the cost and lose money. I wish more people understood the basics of economics and running a business.
Lol ANT! Bro I love how you can't help bringing up taxes in every thread!
ppl r more mad that they have to pay to use there own money
All of you that are outraged about this should direct anger at Senator Durbin not the banks. The US has, by far, the most competitive banking sector with >7,000 banks (please find me another industrialized country that has this many and not even more of an oligopoly, or "TBTF" system). This is not just a TBTF bank phenomenon, all banks will be looking to find ways to limit the impact of the Durbin amendment on their business, maybe they will be less transparent than BofA but every bank CEO has said they will mitigate the impact, and correctly so. As for losing unprofitable depositors, banks right now have too many deposits (didn'y you see BNY Mellon start charging for large deposits?) and the only thing they can do with them is put them in low-yielding securities because there is no loan demand in this country. As a result, interest margins are being squeezed and regulators are doing their best to kill any fee income generation.
Fox Business anchor cuts up her BofA card on-air. Hilarious:
How stupid do you think she feels now that Citigroup is jumping on the debit card fee bandwagon?
http://articles.latimes.com/2011/sep/30/business/la-fi-1001-citi-checki…
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