Banks canceling debit card fees after consumer backlash
CHATTANOOGA (WRCB) -- With Americans on edge because of the tough economy, several banks are now backing off debit card fees in the wake of widespread public outrage.
First Tennessee Bank joined that group.
Banks say this started because of a new federal regulation, that kicked in October 1st, cutting in half the fees banks could charge retailers for processing purchases made with debit cards.
To make up for all that lost money, a list of banks announced they would start charging the customers.
Now those banks calling the plan off.
The monthly fees ranging from $5 at Bank of America and Suntrust to $4 at Regions and $3 First Tennessee, just for the convenience of using your debit cards.
"We'll take our monies out, that would be the way to do it you know we older people just might have to do that," First Tennessee Bank customer Imogene Odom told Channel 3 on Oct.4.
That's exactly what many did, opting for smaller banks instead.
"We did lose some accounts that had decided they were going to move," says Keith Sanford, President for First Tennessee Bank.
Now after several big time banks have backtracked, Sanford says they had no other choice but to do the same.
"Due to a, some customer sentiment that they didn't like the fees and "B", some competitors deciding they were going to reverse their course of action... It really left us no place to go," says Sanford.
Customers say they're glad their bucking worked and aren't surprised these banks are backing down one after the other.
"Fear (of) public reaction. Going to credit unions and such," says Steve Kington, Regions Bank Customer.
Sanford says all these banks remain in the same boat, looking for other options to make up for their losses.
"For us its well in excess of $10 million a year. That is a hole we got to figure out a way to fill," says Sanford.
Analysts say they won't be surprised if banks find 'other' fees to raise, just not as conspicuous as the one for using a debit card.
For those banks who had already started charging the fees, like Regions and Suntrust, they're now refunding their customers.