Bank of America to charge $5 monthly fee for debit card purchases

Nope.
They provide a service and charge a reasonable fee for it.
If the fee isn't worth what you get for it you can take your business to another bank.

But 60 million accounts and 120,000 business customers indicate that people and businesses indeed think it's worth it.

Because providing all the processing related to a Checking Account, ATM, Bill Pay services, Branches and Tellers isn't easy or inexpensive.

Indeed, BofA provides and staffs ~6,000 Branches with about 50,000 tellers and 18,000 ATMS
Their Bill Pay system (part of Deposit products) paid over $300 Billion in bills.

So in their last Annual report they give the numbers.

The Deposit group brought in $13.2 Billion in Revenue.
The Deposits themselves only brought in $8 Billion in interest income which is $3 Billion less then it costs just to provide Deposit services.
So they have to have fees on Checking accounts and for other related services.
Because they had $10.8 Billion in Expenses, including $800 million in Taxes.

Which means they made $1.4 Billion in profit from the Deposit Group.
Or ~10% margin.

In contrast, Apple makes ~20%

http://media.corporate-ir.net/media_files/irol/71/71595/reports/2010_AR.pdf

 

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I generally agree. I mean whether or not the fee is reasonable is a largely subjective question, but I think that those who call it "gouging" or claim that BofA is "screwing" people need to take a deep breath. Talk about "first world problems."

If anyone feels the fee is too high, you're free to move your money. No one is stopping you; problem solved.

If you think operating a bank without charging fees is easy, or that Bank of America is making insanely high profits, you're entitled to the opinion...but I remind you, that's all it is. Personally, I have been known to whine that Starbucks charges like $5 for a cup of coffee where "coffee" comes in only about fourth on the list of ingredients. So we all have these pet peeves...but please keep them in perspective.

 

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What I've noticed is that a number of posters say they are switching to a tiny bank or a small credit union from a big bank.

And are happy about the switch.

Which just points out that they were at the wrong bank to begin with.

BofA is a national bank with 6,000 branches and the Demand Deposit products are really oriented to people who need the more complex products and services only banks like BofA, Wells, US Bank, Citi etc can provide.

If you need that and don't have a fairly large balance or use some of those services (which have fees associated with them), you can expect that you will pay more for your Demand account.

In my experience, most people have much more modest banking needs and can find everything they need at smaller Regional Banks (BB&T, SunTrust, Union Bank etc), or even at Community Banks (Bk of Insert Community Name here) and Credit Unions.

Typically the fees go down as the size of the bank goes down.

 

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The whole bank-hate thing really amazes me simply because people are usually ignorant to the causes of the current economic downturn, and to banking in general.
The government did away with two methods that banks used in order to prevent charging their low-balance customers monthly maintenance fees.

First, banks were no longer able to charge customers overdraft fees on any debit card transactions that bring their account negative unless they "opt-in" to such fees. These fees in many ways subsidized other low-balance account holders who never did overdraft their accounts.

Secondly, the government restricted the amount banks could charge for interchange fees when said debit card transactions took place if the bank was of a certain size. This again limited revenue on low-balance accounts.

Considering all of the services provided on an account (branches, online banking, mobile banking, ATM's, bill pay, ACH, etc....), it costs about $250 dollars a year to keep an account open. Technology has made that true, especially considering that larger banks usually offer more. It requires an average balance of about $2500 a year to break even on that account. If you have below that average and do not pay any maintenance fee, than that bank is losing money on you and probably does not want you anyway. It is like paying a dollar for a hotdog and then selling it for 90 cents. Does this make banks evil because they actually want to make money?

Think of how much people pay to cable companies every month to have a signal sent to their home, but they do not complain about that price. How about the dollar amount to AT&T for their I-phone?

The government needs a villain to blame for the economic downturn and banks make an easy victim. They seem to forget that Fannie and Freddie, who have received the lion’s share of bail-out money and set toxic lending guidelines, were controlled by the government. Imagine that.

Yes, banks need to charge customers fees for a service that they provide, like every other company in the world. This does not make them bad?

 

Allowing losses on low balance accounts has historically been a tactic to generate customer loyalty. I'd be interested in the exact statistics of individuals who had bank low balance savings accounts before acquiring a mortgage from the same bank, and those who switched for their mortgage. Today it may not be as prevalent, but historically it has been a high correlation...it was just easier before for customers. The fact banks are disincentivizing this behaviour signals market trends have changed. The average individual is far more likely to stray away from their current bank for better rates. And why not? It's all online anyways.

Freddie and Fannie are non-governmental organizations with strong ties. They per capita fared far better than most banks with perhaps exception to Wells Fargo while still providing more low-income loans than the big four. It was design to be a risky venture, and it's unfair to blame them for much.

 

The tactic of low-balance accounts, again, was subsidized by accounts that paid a large amount of overdraft fees and interchange fees on debit cards.
Most banks offered a lower rate if a customer opened a checking and had an auto-debit, but this tactic was a failure. Most customers kept their household account at their previous bank and would simply put the mortgage payment into the account. These are typically referred to as "shell" accounts, and they were rampant. When the cost of accounts began to matter, then banks either quit the practice or put more difficult stipulations to show activity.
As for Freddie and Fannie, they WERE NOT non-governmental organizations, but rather private/government hybrids. Yes, the government had immense influence over their lending guidelines, especially the U.S. Department of Housing and Urban Development.
Freddie and Fannie held about 40% of all mortgages, and obviously, they are not the only culprits. There were many lenders who took to lending subprime loans at an even faster clip than Fannie and Freddie.
To make the argument, however, that Fannie and Freddie do not set the tone for how lending guidelines are written is ludicrous. Certainly, the dominated that market, and if the government had put the brakes on those two organizations, the majority of the banks would have followed.

 

More BofA screwing with it's customers

BofA is not the only bank that's messing with it's customers, but it's a bank I have personal experience with. They are money grubbing bastards and I blame a republican congress for giving banks the freedom to pull this shit on it's customers.

 

just a post to see if old thread comes back to top from four pages back

 

BofA and other banks are busted again for screwing their customers.

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Billy, I still could not get the following to add to this topic as a new post. I keep getting that it needs moderator approval and then it redirects me back to the B & E sub-forum to await.


BofA and other banks are busted again for screwing their customers.

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