Posted on Wed, Nov. 02, 2011
last updated: November 02, 2011 01:21:53 PM
Amid a consumer backlash that went as high as the White House, Bank of America on Tuesday became the latest bank to scrap plans to charge customers a monthly fee to use their debit cards.
But the about-face by some of the nation's largest banks came too late to stem the exodus of some of their customers.
The controversial fees have triggered a surge in new checking-account customers for local credit unions and community banks.
Coastal Federal Credit Union, which has 15 Triangle branches, landed 1,800 new checking accounts in October, more than double the amount of a typical month.
"It's been an absolutely wild October," said Joe Mecca, spokesman for Coastal Federal Credit Union. Credit unions are cooperatives that are owned by their members.
Consumer resentment against the fees is so great, in fact, that it triggered a viral, grassroots movement that calls for bank customers to shift their money to credit unions and community banks on Saturday, which has been dubbed "Bank Transfer Day."
But now that the banking giants have backed off from the fees in recent days, it remains to be seen whether customers will continue to move their accounts.
Tony Plath, a finance professor at UNC Charlotte, speculates that the big banks could continue to lose customers, but he expects the pace will slow down.
He said that the banks misjudged their customers when they devised the fees; they expected their best customers to complain a bit but ultimately shrug off the fees because of the hassle involved in switching accounts. Many customers automatically pay mortgages and other monthly bills from their accounts and have their paychecks directly deposited into their accounts.
But the outrage went as high as Washington with President Barack Obama suggesting that the government could crack down on fees and U.S. Rep. Brad Miller, a Raleigh Democrat, introducing legislation to make it easier to switch banks.
Read the complete story at newsobserver.com