Bank of America pokes $5-a-month stick in the eye

Some will rob you with a six-gun, some with a fountain pen.

Bailout queen Bank of America will start gouging its customers for using debit cards next year because it can't gouge them for swipe fees any more.

Report Reuters,

Bank of America Corp plans to charge customers who use their debit cards to make purchases a $5 monthly fee beginning early next year, joining other banks scrambling for new sources of revenue.

U.S. banks have been looking for ways to increase revenue as regulations introduced since the financial crisis limited the use of overdraft and other fees.

The Dodd-Frank Act's Durbin amendment, due to go into effect on October 1, caps fees banks can charge merchants for processing debit card transactions at 21 cents per transaction from an average of 44 cents, potentially costing banks billions of dollars.

We're reminded of Elizabeth's Warren's comment:

The American middle class became the turkey at the Thanksgiving dinner. It's not only that they didn't get a seat at the table, they were served on a platter. They fed those who got rich during the boom.

Or, as the Naked Capitalist puts it,

Banks don’t like it when their imperial right to loot customers runs into interference, do they?

Naked Capitalist further explains:

The Charlotte bank is trying to preserve margins by circumventing the intent of new legislation, which was intended to stop what amounted to bank price gouging for debit cards (you can drive a truck between the cost of providing the service and what banks charged). That’s why it’s such a shame our bank regulatory apparatus has been co-opted by the industry. A competent regulator would beat back a brazen effort like this to game new rules.

It’s hardly novel to say that the banking industry has become too large relative to the real economy and increasingly extractive in its posture. The industry needs to shrink, both in size in profits. ... The intent of the legislation was in fact that banks make less money on the debit card service; the BofA strategy to deal with it is tantamount to a stick in the eye.

She recommends moving your money to a local bank, cancel your Bank of America credit card and tell a customer services representative exactly why you're doing it.