The Bank of America has announced Thursday that it will start charging a $5 monthly fee in 2012 for customers that make debit card purchases. The move has outraged customers, with many threatening to take their custom elsewhere.
Poorer customers are expected to suffer more as they are less likely to have credit cards to use as an alternative.
Bank of America has made the announcement in reaction to regulations introduced since the financial crisis that has limited the bank’s use of overdraft and other fees as a way of making revenue. The bank, of course, is now passing the charges onto customers in other ways.
Other banks have also introduced the charge on debit cards over the past year, as the sector struggles to optimize its revenues.
The announcement has made such waves through the banking industry Thursday as the bank is the largest in the U.S. in terms of deposits.
Anne Pace, a Bank of America spokeswoman has announced that customers will only be charges the fee if they use their debit cards in any given month for purchases. The fee will not be instigated by simply withdrawing cash from an ATM.
The move is a double money-earner because driving customers to use credit cards is of greatest benefit to the largest banking institutions such as the Bank of America. Such banks hold the largest credit card portfolios.
The change in charges also comes just months after an Associated Press-GfK poll found that roughly two-thirds of consumers use debit cards more frequently than credit cards. However, the poll found that even if customers were charged just a $3 fee for using their debit cards they would prefer to find other methods to make their payments.
Bank of America's new fees for debit cards will be implemented in stages across a number of states in early 2012. It has not been announced which states will be first in-line for the charges.