The big news today in banking is JPMorgan Chase backing away from debit card fees that have sparked consumer outrage and inspired some to push for a national Bank Transfer Day. From Robin Sidel at The Wall Street Journal:
Following eight months of consumer testing, J.P. Morgan Chase & Co. has decided that it won't charge customers who use their debit cards to make purchases, according to a person familiar with the bank's plans. The New York bank's Chase retail unit is one of the largest U.S. consumer banks, with 26.5 million checking accounts and 5,300 branches.
J.P. Morgan joins U.S. Bancorp, Citigroup Inc., PNC Financial Services Group Inc., KeyCorp and other large banks that have said in recent days that they won't impose monthly fees on debit cards. None of those banks said they made their decisions because of the outcry over Bank of America's fees.
It's nice to see banks are reconsidering hitting customers with debit card fees in the face of public outrage. The cynic in me, though, thinks that banks will just find other, less visible, ways to increase pricing on checking accounts.
For example, Citi has gone on record saying there will be no debit card fees, but they've raising their monthly maintenance fee to $15, higher than the total cost of a comparable account at Bank of America, even with the infamous debit card fee.
Other banks have gone a more subtle route, offering still offering free checking, but only if customers accept restrictions like using ATMs instead of tellers and receiving electronic statements instead of paper. If you want traditional banking "privileges," you'll need to sign up for an account with a monthly fee.
These types of tactics drive home the importance of looking at the total monthly cost for your checking account. It doesn't matter that much what a fee is called or what it purports to charge you for, what matters is what you end up paying each month.
That's where I think the Consumer Financial Protection Bureau should consider getting involved; not with pricing decisions, per se, but with clarifying customers' total monthly costs on their websites, statements and other customer communications. That way, consumers can make the best possible decisions and avoid being fooled by semantics and marketing mumbo jumbo.
What do you think? Does it matter to you what a fee is called? Do you feel more concerned with debit card fees than other types of fees?
Update: Bank of America is reportedly considering scaling back its planned debit card fee. From Rick Rothacker at Reuters:
Bank of America Corp, after receiving heavy public criticism for a planned $5 per-month debit card fee, is likely to give customers more ways to avoid the fee, a person familiar with the bank's plans said Friday.
The second largest U.S. bank is likely to allow many customers to avoid the fee by taking measures such as maintaining minimum balances, having paychecks direct deposited, or using Bank of America credit cards, the person said.
Under earlier plans, customers might have needed balances totaling $20,000 across all their Bank of America accounts to avoid the fee.