Bank of America announced it will begin charging certain checking accounts a $5 fee for debit card usage. They are actually late to the party as other larger banks (Wells Fargo, Suntrust, Chase) have already announced they’ll be giving away feebies.
Most consumers will immediately become outraged at the banks but I’m having different feelings.
Remember when our ever-growing government decided they were getting paid for doing nothing, so they wanted to get involved in the Financial Services industry? Remember that?
Remember the moron named Richard Durbin?
You probably don’t; but he caused this mess.
Banks are businesses. Businesses are ultimately in business to make money. If someone comes in and says: “hey! You’re making too much money! We need to put a limit on this!”
As a business owner, would you accept this dumbass’s imposed limitation or would you look for other ways to make money?
That’s all banks are doing right now.
Every time someone swipes their card at a store, the card issuer makes money. As the nation’s largest card issuer, Bank of America is expecting to take a massive hit from these new limits. To put this into meaningful terms, Bank of America earned roughly 3 Billion dollars from these fees last fiscal year. After the changes, they expect this number to be reduced by 80%.
Not-so-fun example:
- 3 Billion (old revenue)
- x 20%
- = 600 Million (new revenue)
- 3 Billion – 600 Million
- = 2 Billion 400 Million – what company could afford this loss?
- / 30,000 (expected # of employees losing their job)
- = 80,000 (the average employee would have made)
What should the government do to reduce unemployment?
Nothing. Everything they do seems to have an adverse effect.
If your bank is beginning to charge for debit card usage, I would encourage you to switch banks. If the relationship you have with your bank is worth more than $5/month then that is awesome (don’t switch). Whether you decide to stay or go, I’m only asking you one thing:
Don’t lash out at your bank. Instead send hate mail to our pathetic government.
[…] Funancials writes on a topic that gets me worked up… so I’ll resist saying anything and simply present his article, “Bank of America Debit Card Fee.” […]