New debit card fees at major banks are prompting many longtime customers to switch to credit unions.
"If everybody does it, then maybe banks will pay attention and we can change the way things are," said Bradley Cordle, who is closing her accounts with two large banks and opening a new one with Charlotte Metro Federal Credit Union.
Charlotte Metro has seen a 350 percent increase in new account applications online and an 88 percent increase at branches in recent weeks, according to chief operating officer Nicol Morris.
Meanwhile, the National Association of Federal Credit Unions has seen traffic more than triple on its search website CULookup.com, according to Patty Briotta, NAFCU's public relations manager.
While non-profit credit unions and many community banks still offer fee-free debit cards, large banks insist they need additional funding to maintain the vast ATM networks and other services consumers expect from them.
"There have been studies done by the Federal Reserve and others that would suggest a checking account costs between $200 and $300 a year to monitor, to give, to operate," said John Stumpf, CEO of Wells Fargo.
However, consumer backlash may be prompting some banks to consider alternative revenue streams to maintain those accounts. Chase and Wells Fargo are ending pilot programs that charged customers in certain test markets a monthly debit card fee of $3.
And Bank of America may soften the impact of a $5 debit card fee planned for next year. The Associated Press cites a source at BofA, suggesting the bank will make it easier for customers to avoid the fee by maintaining minimum balances or signing up for additional financial services.
According to analysts, the debit card fees were an attempt to offset losses due to the Dodd-Frank Act's Durbin Amendment, which imposes a cap on what large banks can charge merchants for each debit card transaction. What was once an average fee of 44 cents per transaction is now limited to approximately 24 cents.
"The reality is we were all paying these fees before," said Ryan Hamilton, a professor specializing in consumer behavior at Emory University's Goizueta Business School. "Retailers were charging a little bit more for every box of pasta that you bought to help cover some of these exchange fees."
While some bankers argue the new fees offer more transparency, many consumers don't like seeing a bill for, what used to be, a "free" service.
"The fact that the charge is so visible, so salient, it's gonna appear every month on their bill, is what's driving a lot of this change," Hamilton said.
It's change that credit unions are taking to the bank.
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