-- Citing customer concerns and a "changing competitive marketplace," Bank of America said it won't charge customers a fee for using their debit cards.
"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," said David Darnell, co-chief operating officer. "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."
On Monday, SunTrust and Regions Bank announced that they have abandoned plans to charge customers a debit card fee. On Friday, Wells Fargo announced that it has canceled plans to test a debit card fee in five states.
JPMorgan Chase, which has been testing the fee in two states, has also decided not to extend the fee when it expires this month, according to a source with knowledge of the plan who isn't authorized to discuss it.
Bank of America's plan to charge customers $5 a month to use their debit cards sparked a powerful consumer backlash. Even President Obama weighed in, stating the fee pointed up the need for a strong consumer watchdog. Activists have designated Nov. 5 as "Bank Transfer Day" and are urging consumers with accounts at Bank of America and other big banks to switch to a small bank or credit union.
"For many consumers, the Bank of America debit card fee was the last straw," said Norma Garcia, manager of Consumers Union's financial services program.
Banks have blamed the new fees on a regulation that slashed the fees financial institutions can charge retailers whenever consumers use their debit cards. The regulation exempted banks and credit unions with assets of less than $10 billion.
While customers will escape debit card fees, banks will likely make up for the lost revenue in other, less visible ways, analysts say. Free checking, for example, is rapidly disappearing. Only 45% of non-interest checking accounts are free, down from 65% in 2010, according to a survey by Bankrate.com.
Banks "will find some way to increase their revenue, and it's always the consumer that will end up paying for these increases," says Bill Hardekopf, chief executive of LowCards.com.