Senator Dick Durbin (D-IL) released a statement on Friday criticizing Bank of America's plan to start charging debit card users $5 a month.
"It seems that old habits die hard for Bank of America," Durbin said. "After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers. It’s overt, unfair and I hope their customers have the final say."
Bank of America's new fee made news on Thursday. The move is seen as a response to new regulations going into effect October 1. The so-called Durbin amendment, named after the Illinois Senator and part of the financial reform law, will put a cap on the fees banks can charge merchants for processing debit cards. The change could potentially disrupt billions in revenue for the banks. In his statement, Durbin stood by the new rules.
“Earlier this year the Federal Reserve determined that the interchange fees Visa and MasterCard fix for big banks grossly exceed the cost of processing a debit card transaction by some 400%," he said. "Thankfully, on October 1st that flawed system will be replaced by a more transparent and competitive market. Swipe fee regulation will still allow banks to cover the actual costs of debit transactions but will rein in the banks’ excessive profit-taking. Small business and merchants will benefit from fee relief and consumers will benefit from lower prices. And banks that try to make up their excess profits off the backs of their customers will finally learn how a competitive market works."
Bank of America's new fee will affect only customers that use their debit cards to make purchases. Customers that only use their debit cards at ATMs will not be charged.
The New York Times reports that Bank of America is just the latest bank turning to debit card fees:
Wells Fargo and Chase are testing $3 monthly debit card fees. Regions Financial, based in Birmingham, Ala., plans to start charging a $4 fee next month, while SunTrust, another regional powerhouse, is charging a $5 fee.