Like motorists viewing a grisly car wreck, big banks are slamming on the brakes and rethinking any plans they may have had to start charging customers for using debit cards to make purchases.
J.P. Morgan Chase is the latest to say it has decided to take a pass on the fees, according to The Wall Street Journal.
Don't, though, jump to the conclusion that Chase never charges for debit cards. Brad of Denver will set you straight on that.
"I lost my direct deposit when I lost my job. Now I have to make 6 purchases on my debit card to prevent a $6 charge to my bill," he told ConsumerAffairs.com recently.
"'So I have to spend money to prevent you from charging me,' I asked the Chase representative on the phone. She laughed and said, 'They can be small purchases, like a candy bar or a pack of gum,'" Brad said
"So Chase is making me spend money so I don't lose money to Chase," Brad asked. Yes, said Chase. Brad calls this a "slap in the face."
On the sidelines
Chase joins US Bank, Citigroup, PNC, Key Bank and other large banks on the sidelines, watching with quiet fascination as Bank of America is tarred and feathered by customers enraged over its $5 per month debit fee.
Bank of America, meanwhile, may be getting that weak-kneed feeling. It has not yet implemented the fee and now says it hasn't worked out the details and asserts that the new fee won't affect everyone -- sort of a "fee, what fee?" defense.
Wells Fargo, Regions Bank and SunTrust have all been testing various types of fees in selected markets. No one is yet discussing the results publicly.
Where's the money?
The banks say they need to regain billions of dollars in revenue that's been lost because of new restrictions on overdraft charges, credit card fees and interest rates and debit card transaction fees that are charged to merchants.
Free checking is already a thing of the past except for those who have enough money in their account that they couldn't care less about a $15 or $25 monthly fee. Banks still like customers who have lots of money, after all.
The banks may be feeling like Netflix these days. Netflix has been hammered for trying to raise prices to enable it to buy the streaming rights to more movies. Bankers tend to think they provide a valuable service and don't begrudge themselves a hefty fee or two in return.