Once upon a time, the banks were determined to win your business. To get you to open a checking account they’d lure you with anything from duffel bags to free cell phones depending on what kind of customer they pegged you to be. These tactics attracted scores of personal banking clientele over the years from smaller institutions that couldn’t provide such giveaways. The mass closing of independent banks over the last several decades is a testament to that fact.
But as it turns out, big banks only offered these perks because they could afford it. And as it really turns out, they never could afford such things in the first place.
These days, the bailed out banks and other “too big to fail” financial institutions are scrounging up everything they can in the form of hidden fees. This is a result of no-holds-barred government regulations riding on the coattails of the billion dollar government checks written to the banks. Banned from sucking money from individuals one way, they’ve figured out ways to do it another way. The latest is the $5.00 monthly debit card fee from Bank of America. Additional surcharges and tacked-on costs notwithstanding, this new form of fees is bound to fail like the big bank that came up with it. The following are four reasons why there’s no way a debit card fee is ever going to fly for long:
Big banks are way too unpopular: Despite their cushy relationship, it seems apparent that big bankers haven’t learned much from their pals in national politics. When alternatives exist, you don’t push the burdens of your bad mistakes onto the masses. This is especially the case when your popularity is in the gutter. Nobody views Bank of America and other big banks favorably, so such a measure is not going to go well.
Alternatives are popular: As previously mentioned, the worst thing you can do is alienate your base when reasonable alternatives exist and can easily replace you. Credit unions and other alternatives to traditional personal banking are growing in popularity among a public jaded with the way in which big banks have taken the economy and have seemingly avoided responsibility.
Someone will always offer it for free: The reason big banks are applying these outrageous new fees in the first place is because they’re getting clamped down by the government they owe money to. Alternatives that aren’t in this position see debit transactions as cost effective, since they reduce the amount of overhead necessary for “brick and mortar” banks housing cash and other physical assets.
People can leave: It all comes down to this. Closing bank accounts and opening news ones has always been easy and always will. It’s what made the old “lure ’em in” strategy work so well for so long. Now, it’s what will doom big bank plans to make people pay for on-the-go electronic money transfers. People won’t tolerate it when they know they can go somewhere else that won’t charge. They’ll close their accounts and open a new one in the same day.
Maybe Bank of America thinks people won’t bother to close their accounts over a $5.00 fee. Maybe they’re forgetting that to people with no jobs, low pay, and/or limited future financial security, a few hours isn’t much time and $60.00 a year is a lot of money.