Oct. 01 (Source: By Rolf Boone, The Olympian, Olympia, Wash.) - Bank of America’s decision to start charging its debit card customers a monthly $5 fee could mean more business for South Sound financial institutions, credit union and community bank officials said Friday.Bank of America on Thursday disclosed a plan to start the fee next year, triggering phone calls and inquiries from existing and new customers to banks and credit unions in Thurston County.
The Washington State Employees Credit Union typically receives 30 to 40 inquiries a week about membership; that had risen to 62 by early Friday, spokeswoman Ann Flannigan said. The credit union’s call center fielded 16 debit card-related phone calls Friday morning, she said.
“The questions ranged from credit union policy to, ‘Are you going to make a change?’” Flannigan said. No fees are planned, she added.
Bank of America’s decision has created a firestorm in the banking industry and created some local interest for Heritage Bank, President and Chief Executive Brian Vance said.
“From the prospective of a community banker, their decision will create opportunities for us, no question about it,” he said. Heritage Bank has no plans for a debit card fee, Vance said.
Bank of America’s announcement follows tests by Wells Fargo and Chase for $3 monthly fees for debit cards in some markets. Other banks have begun charging for basic checking. Banks have sharply restricted their rewards programs for debit cards.
Bank of America said the fee will apply only when customers use their debit cards for purchases in a certain month. The fee will not apply if the card is used only to access ATMs. It will not apply for customers who keep high balances.
Debit fees hit particularly hard because banks have spent the past decade encouraging customers to go for the ease of the cards, which deduct purchases immediately from a checking or savings account.
In 1995, debit cards accounted for only 1 percent of the transactions when people pulled a card out of their wallet to pay for something. Credit cards made up the rest.
Debit card use grew steadily, hitting 50 percent in 2006. Today, more than 530 million of them are in use in the U.S. Two out of every three times someone reaches for plastic, it’s debit, according to the Nilson Report, which tracks the card industry.
South Sound Bank President and Chief Executive Dan Yerrington said the bank, too, had received inquiries about its debit cards, but he was unsure about how much more business it would generate.
“It takes a lot to get people to change banks,” he said, adding that, for example, many people are unfazed by fees charged when a customer uses a card at a different bank’s ATM.
“In theory, people should go to their own bank where it’s free,” he said.
Olympia Federal Savings received 15 to 20 calls about the savings and loan’s debit card policy, President and Chief Executive Lori Drummond said.
“We have never charged and do not plan to charge for debit card transactions,” she said.
The Associated Press contributed to this report.
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A service of YellowBrix, Inc. Publication date: 2011-10-01
Source: By Rolf Boone, The Olympian, Olympia, Wash.
