On the same day that Bank of America Corp. bowed to pressure and decided to nix a $5 monthly debit fee it had planned to impose next year, a consumer financial-literacy organization released data suggesting the fee would have disastrous results.
Only 3% of consumers would continue using their debit card as usual if their bank imposed a new fee for debit card use, new data the National Foundation for Credit Counseling released Nov. 1 suggests.
The Washington, D.C.-based nonprofit organization gathered its data through an online survey of 2,400 of its website visitors conducted between Oct. 1 and Oct. 31 to determine how consumers would respond to changes in debit card fees. The foundation oversees hundreds of credit-counseling offices nationwide and directs consumers to its national website through financial-literacy outreach efforts.
BofA on Nov. 1 announced that, in response to customer feedback, it has withdrawn plans to charge a $5 monthly debit-use fee next year, joining other large banks including JPMorgan Chase & Co., Wells Fargo & Co. and SunTrust Banks Inc. that in recent days canceled plans to impose or test debit-usage fees (
Asked how they would react if their bank imposed a fee related to debit card use, 3% of respondents to the foundation’s survey said they would continue using their card as usual, while 62% said they would find a bank that does not charge debit card usage fees.
Another 22% of respondents said they would begin paying for purchases with cash if their bank imposed a fee for debit card use, while 8% said they would begin paying by check and 5% said they would begin charging purchases to a credit card.
In publicizing the survey’s findings, the foundation weighed the pros and cons of respondents’ potential actions if faced with a fee for debit card use.
Changing financial institutions could solve the problem of paying new debit fees, but switching to a new bank can be difficult and time-consuming, the foundation warned.
Carrying large amounts of cash around to pay for most purchases could help consumers control their spending, but it also could be “dangerous and inconvenient,” the foundation noted.
Paying by check could maximize the value of accountholders’ existing services, but it could put consumers at risk of incurring overdrafts and penalties.
Charging purchases to a credit card could help consumers build a positive credit score if cardholders manage accounts responsibly. But “credit makes overspending easy,” the foundation warned, and such mismanagement can lead to “financial disaster.”
The foundation advises consumers to carefully weigh all their options if faced with a new debit card fee.
Before switching institutions, “consumers should ask the bank to waive the fee, citing how long they’ve been a customer, how many products they are using, and associated balances,” the foundation advised.
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