When you read this title you probably thought I was being sarcastic, but I wasn’t. I know a lot of America is outraged over Bank of America’s announcement this morning to revise their fee schedule, but I’m not jumping on the bashing bandwagon. I happen to love what they’re doing.
Remember roughly half a year ago when Bank of America announced they would be charging $5 to use a debit card? A lot of people do and the memory stirs up hatred towards the banking giant. Dare I remind you that it wasn’t Bank of America that is charging the fee? Rather it’s our glorious government that is responsible for this cost being passed onto you (the consumer). By limiting the percentage the bank can collect on interchange fees, what used to be 3 billion for BAC is now reduced 80%. Where do you expect them to make this money up?
Banks Are Businesses
I understand that banks used to give away free toasters at account opening but those days are gone. Banks are for-profit companies. I think people often forget about this fact.
Why would a capitalist economy be upset with a company that wants to make money? If Adam Smith is fine with it, then I’m fine with it.
Banks Provide A Service
Though at times it may not feel this way, banks sell you security and convenience. All goods or services that we benefit from come at a cost, no? So why would a banking be any different?
A Step In The Right Direction
I used to be a BAC shareholder but I sold last year (at a good time). I’ll probably buy back in now that they’ve introduced a few more ideas to generate income. Lets be honest: will Bank of America really be $8.00/share ten years from now? I highly doubt it…
Honesty Is The Best Policy
A lot of companies try to hide their fees or wrap them in with other costs. Bank of America on the other hand is being brutally honest. They’re essentially saying “if we aren’t making money off of you, why would we want you?” which I completely understand. Either build your relationship and do more business or get lost.
If you visit the bank’s website they are extremely transparent. There is a section titled “Fees at a Glance” and a demo “Understanding Fees” which helps educate the customer on ways to avoid fees.
The one thing I would consider changing would be the minimum balance requirements and focus more on “deeper relationships” or “increased activity.” It’s extremely harsh to tell someone “I’m going to charge you more because you don’t have enough.” Rather regressive wouldn’t you say?
What are you thoughts on the recent announcement? Are you outraged or do you understand?