September 30, 2011 10:18 AM EDT
Bank of America announced yesterday that it plans on charging its customers $5 a month to use their debit cards, and naturally, B of A users aren’t happy about it. Social media sites like Facebook and Twitter were hit hard by the news. Most people expressed their unhappiness and said they would be leaving the bank before 2012. Others took the next step, calling for a massive campaign, begging people to cancel their B of A accounts. The Durbin Amendment gave the Federal Reserve the power to regulate debit card interchange fees, a step Bank of America feels could cost them $2 billion in annual revenue. In June, the Fed said the maximum permissible interchange fee that an issuer could receive for an electronic debit transaction would be 24 cents per transaction. The announcement from Bank of America comes at time when banks are scrambling to generate new sources of revenue. Profits of major banks, including Bank of America, are hurt by low interest rates and higher capital requirements coupled with a weak demand for loans due to the sluggish economy. B of A isn’t alone, other U.S. banks including Wells Fargo, JPMorgan Chase, and SunTrust Banks, have been experimenting with higher monthly account maintenance fees, higher minimum balances to avoid fees, specific charges to have a debit card, or per-use charges for debit-card transactions. If banks start to charge higher fees on checking accounts to recover lost debit-card revenue, it could push perhaps 5 percent of current bank customers out of the system and into the use of check-cashing stores and other nonbank financial services.