Why All of Us May Have to Pay for B of A's $5 Debit Card Fee
Last week, Bank of America (BAC) ignited a firestorm of controversy in choosing to start charging its customers $5 a month to use their debit cards. Now, an angry consumer group has called for a federal investigation over the practice.
Is the move overkill or a smart response to what could be a budding disaster for the bank -- and taxpayers?
Yesterday, Consumers Union, a division of Consumer Reports that does public policy and advocacy work, asked Congress and financial regulators to look at the new fee. The group cited bad timing in forcing cash-strapped customers to pony up $60 a year in extra fees. In addition, it pointed to the inevitable loss of customers resulting from the fee as endangering the bank's delicate recovery from the financial crisis three years ago.
Balk or Bail?
Bank fees have gotten a lot of attention lately, and with good reason. Having to spend dozens or even hundreds of dollars in such fees over the course of a year can make a huge difference in your personal finances.
The easiest thing to do when your bank imposes a fee you don't like is simply not to pay it -- either by changing what you do or finding another bank without the fee.
The problem, though, is that with federal bailouts of banks such as Citigroup (C), Wells Fargo (WFC), Goldman Sachs (GS), and B of A, everyone now has a stake in seeing the banks survive.
It's Our Bank, Too
Ordinarily, when dumb moves put a company out of business, no one suffers but its shareholders. But if B of A alienates its customers so badly that it ends up requiring yet more assistance from taxpayers, everyone stands to lose. No one wants to see that happen.
No matter what happens on this particular issue, you have to be prepared to see banks try to raise income in countless new ways. Now more than ever, choosing a financially secure bank or credit union that treats its customers right will pay off with big dividends in cost savings.
Motley Fool contributor Dan Caplinger believes that voting with your feet is more powerful than siccing the feds on someone. You can follow him on Twitter here. He doesn't own shares of the stocks mentioned in this article. The Motley Fool owns shares of Bank of America, Wells Fargo, and Citigroup, and has created a ratio put spread position on Wells Fargo.