Nov. 1, 2011 at 11:37 AM ET
Bank of America said Tuesday it is dropping its heavily criticized plan to charge customers $5 a month for making purchases with their debit cards.
The nation's second-biggest bank made the announcement in a brief news release posted on its website.
"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," David Darnell, co-chief operating officer, said in the statement. "Our customers' voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."
Bank of America triggered widespread outrage with its announcement in late September that it would begin charging some customers a monthly fee for debit card use beginning Jan. 1. While other banks were testing the fees, Bank of America took a leading role in trying to assess the fees to recoup revenues being lost due to new federal limits on "swipe fees" charged to merchants that went into effect Oct. 1.
The debit card fees would have been waived for customers who had large balances or "premium accounts," a factor that only stoked outrage in an atmosphere where Occupy Wall Street protesters across the nation have been railing in favor of the "99 percent" and against the top 1 percent of earners.
In recent days Bank of America tried to soften its stance on debit card fees, suggesting that more customers would be eligible for a waiver. But as rivals such as Wells Fargo, SunTrust and Regions ended tests or nixed plans for debit card fees, Bank of America was left virtually alone in its effort to charge for debit card fees.
A groundswell of opposition led many people to urge customers to switch to credit unions or banks that were not imposing heavy fees, culminating in "Bank Transfer Day," which is set for this Saturday.
Bank of America's announcement Tuesday sparked an outburst of satisfied comments in the Twittersphere, with one commenting that "The only thing shorter than Kim Kardashian's marriage was Bank of America's credit card fees."
Others gave credit to the Occupy Wall Street movement for forcing Bank of America's hand, although the outrage against debit card fees was even broader than the multicity protest movement.
Bill Hardekopf, CEO of LowCards.com, cautioned that banks would find other ways to make up for the billions in revenue they are losing due to the swipe-fee limits.
"They will find more subtle ways to make up for this lost revenue, increases that may fly under the radar," he said. "Banks may increase existing fees or raise the introductory interest rates on credit cards. They will find some way to increase their revenue, and it's always the consumer that will end up paying for these increases."