Banks Back Away from New Fees, Focus on Cost Cutting Instead
The financial world's fee fever may have abated -- for now.
On Friday, Bank of America (BAC) seemed likely to add more ways for customers to avoid the $5 debit-card fee after coming under severe criticism since it announced the new fee in September.
A person familiar with the bank's plans said that the altered rules would allow many customers to avoid the fee by maintaining minimum balances, using direct deposit for paychecks, or by using Bank of America credit cards, Reuters reported.
Other big and medium-sized banks including J.P. Morgan Chase (JPM), Citibank (C) and Key Bank (KEY) say they're not implementing fees for debit card use anytime soon, reported the The Wall Street Journal.
Still, the banks are looking for ways to make up for the revenue lost under new federal regulations enacted earlier this month, and to compensate for low interest rates. (Banks aren't making much money off your money these days.) That has translated into cost-cutting at some institutions. For customers, that could mean fewer real people to help you bank and more emphasis on ATM and online banking.
Last June, Wells Fargo (WFC) announced plans for cost cutting through streamlining technology and by pushing customers to use more online and mobile services, which would reduce the need for staff.
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Regional banks are on a cost cutting kick as well. Cleveland-based Key Bank has reduced processing costs associated with checking accounts, says David Bowen, its head of consumer products. The bank has also rolled out a rewards program to increase customer participation in automated banking.
The Connecticut Post reported that Webster and People's United banks could implement cost cutting moves in response to a decline in revenues caused by a squeeze on interest margins. Quite simply, banks are making less when they lend money out, thanks to today's lower interest rates.
FirstMerit Bank, which has more than 200 branches in Ohio and Pennsylvania, also said it would undergo cost-cutting measures, The Plain Dealer reported, though what those will look like are not yet clear.
BB&T, the18th-largest bank in the United States, this week asked bank managers to to come up with ways to cut costs, but has not announced specific measures, Reuters reported.
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