Bank of America Fee Hike Gives Credit Unions A Boost
Credit unions are benefiting from a hike on debit card fees imposed by Bank of America on Sept. 29. They are taking advantage of the growing anti-bank sentiment across the country as evidenced by the Occupy Wall Street movements.
Another proof is the big jump in applications experienced by some credit unions for membership. In September, the National Association of Federal Credit Unions logged a 350 percent increase in Web traffic to its online credit union locator.
Besides capitalizing on the anti-bank sentiments, credit unions are highlighting their advantages such as no checking and debit card fee, no minimum balance requirements and quarterly paid dividends.
The advantage credit unions and community banks with less than $10 billion in assets have compared to banks are that these establishments are exempt from a new government rule that cut interchange of swipe fees which led banks to impose new fees.
Besides BofA, Suntrust also tacked in fees on debit cards, while Citibank phased out its free checking accounts.
To give the shift from banks to credit unions a bigger push, a Facebook group marked Nov. 5 as Bank Transfer Day when depositors are encouraged to close their bank accounts and transfer their savings to credit unions to avoid escalating bank fees.
This early, BofA is rethinking its plan to charge $5 a month for the use of their debit cards, according to reports. Although bank officials said there is no firm conclusion yet, a new plan being hatched would exempt customers who hold BofA credit cards, directly deposit their pay into the bank or hold a minimum balance from the $5 fee.
Previously, BofA said the fee would only be waived if the debit card holder has a minimum balance of $20,000.
The cardholder backlash is also causing other banks to reconsider plans to impose a fee.
Wells Fargo canceled on Friday a test that would charge debit cardholders from Georgia, Nevada, New Mexico, Washington and Oregon $3 a month. JPMorgan also decided against imposing a $3 stand-alone debit card use fee per month.
U.S. banks are estimated to lose $6 billion from the mandated reduction in swipe fees.
Mixed fortunes for U.S. banks
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