The majority of banks seem to be engaged in a silent war against the Credit Card Act of 2009. The new regulations caused the banks to lose money — by not being able to charge accounts an inactivity fee, certain overdraft and excessive late charges. However investors are anxious to maintain a customer base that is profitable. One way to keep the bank profitable is to raise customer fees that are not exempt under the new regulations.
CNN Money reported that Bank of America CEO Brian Moynihan’s presentation to investors last week in which he said, “We currently estimate over time through these and other items we are working on that we will have the ability to offset a substantial majority of the revenue from the various regulatory changes.”
This year, Bank of America applied annual fees ranging from $29 to $99 to a variety of credit card accounts. Just last week, Bank of America said it plans to raise minimum balance requirements over the next 12 months and charge a monthly account fee for customers who can’t maintain those balances. Customers enrolled in the lender’s new eBanking checking account will be charged $8.95 per month if they opt to receive paper statements and visit tellers instead of banking online. Since the launch of eBanking in August, nearly half of all new checking accounts fall into this category.
This month, Citibank checking accounts previously assessed as low are $3 will now assess monthly maintenance fees of up to $30. The higher fee depends on the type of checking account and whether the customers meet certain requirements. These can include making a certain number of monthly transactions or carrying a specific minimum balance.
As of July 1, HSBC charged a $19 annual fee for customers to open a line of credit and an additional $10 for each every day they use the credit line. An HSBC spokesperson said “This is not unusual in the industry and our competitors have been charging similar such fees for some time.” He said. “The change aligns us with our competitors.” Why doesn’t HSBC just link the checking and savings accounts to avoid overdraft? HSBC does not offer linked customer accounts. Customers that qualify will either pay a fee to open a line of credit, pay a fee each time they access the line of credit and until they pay it back, or get their card declined.
Also in July, American Express added $29 fees to more of its partner cards. Customers using cobranded cards for Delta, JetBlue, Hilton and Starwood forfeited reward points for paying a bill late. The company claimed it did this to be “consistent and have it across cards.”
Wells Fargo will charge $2 for images of canceled checks with the paper statements, and a $10 fee for each transfer from savings to checking to cover overdraft transactions.
The reasons for the increases are to “align us with our competitors” to be “consistent” to protect customers from “over drafting their checking account” or as a penalty for a late bill payment. According to a study conducted by the Pew Health Group’s Safe Credit Cards Project in 2010 alone, cash-advance fees and balance transfer fees have risen to 4%, up from 3% in July last year.
So far, JPMorgan Chase and Discover announced that new checking account or credit card fees have not been introduced in this past year. These companies may be in the best position to grow their customer base and turn a profit for their investors.
Candi Sparks is the author of the “Can I Have Some Money?” books series.