Wells fargo cancels debit card fee

[MichaelB]

Another bank cancels its debit fee. http://www.bloomberg.com/news/2011-...m-of-3-debit-card-fee-as-customers-react.html

Wells Fargo & Co. (WFC), the fourth- largest U.S. bank by assets, canceled plans to charge a $3 monthly fee for using its debit cards after customers in a five- state pilot program opposed the charge.

I have mixed feelings about this. Banking services cost money, and when the bank does not charge me it does charge others, probably people with less financial literacy.

 

[makincaid]

If you have a checking account with a bank, then aren't they already getting to borrow your money interest-free?

Do they really need to charge a fee too?

 

[thefinancebuff]

If you have a checking account with a bank, then aren't they already getting to borrow your money interest-free?

Do they really need to charge a fee too?

Yes but the value of that interest-free borrowing isn't very high these days. Banks used to lend at say 8% on a car loan. Now they lend at 4%. The value they get from your 0% deposit just dropped in half. They still have to give you the same banking service as before. A fee makes up some of the difference.

 

[73ss454]

Yes but the value of that interest-free borrowing isn't very high these days. Banks used to lend at say 8% on a car loan. Now they lend at 4%. The value they get from your 0% deposit just dropped in half. They still have to give you the same banking service as before. A fee makes up some of the difference.

It's all relative, they make less but so do we. Should we make less on our money and bank stays the same?

 

[thefinancebuff]

It's all relative, they make less but so do we. Should we make less on our money and bank stays the same?

The previous poster was talking about checking accounts, which usually earn 0% interest. You used to earn 0% and you still earn 0% on money in a checking account. How do you make less? If you are talking about savings accounts and CDs, banks are not charging fees on those accounts. Savings accounts and CDs also don't require as much service as checking accounts do.

 

[73ss454]

The previous poster was talking about checking accounts, which usually earn 0% interest. You used to earn 0% and you still earn 0% on money in a checking account. How do you make less? If you are talking about savings accounts and CDs, banks are not charging fees on those accounts. Savings accounts and CDs also don't require as much service as checking accounts do.

Up until a few years ago I always received interest on my checking although I admit it wasn't much. I have 2 checking accounts and my bank charges $13 a month if I don't keep $1500 in each. Then they decided to charge $4 a month for my debit card use. I canceled my debit card but took a credit card from them. Leaving a balance of $1500 is as far as I'll go. If they play any more games I'm gone. Funny that they want to charge me to use my own money on a debit card. Don't they make enough money on the kick backs from the vendors I use?

As I said, if I make less they can make less also.

 

[youbet]

Up until a few years ago I always received interest on my checking although I admit it wasn't much. I have 2 checking accounts and my bank charges $13 a month if I don't keep $1500 in each. Then they decided to charge $4 a month for my debit card use. I canceled my debit card but took a credit card from them. Leaving a balance of $1500 is as far as I'll go. If they play any more games I'm gone. Funny that they want to charge me to use my own money on a debit card. Don't they make enough money on the kick backs from the vendors I use?

As I said, if I make less they can make less also.

I've got no fee checking with no minimum balance and with free checks too as a feature offered to "seniors" by our local bank. Seems too good to be true, but I've had it several years now. Look around.

We have 2 no fee credit cards and no debit card.

Good deal on canceling your debit card. They really serve no purpose other than the banks make more money on them than credit cards (that are always paid off in full monthly).

 

[W2R]

Another bank cancels its debit fee. http://www.bloomberg.com/news/2011-10-29/wells-fargo-cancels-pilot-program-of-3-debit-card-fee-as-customers-react.html
I have mixed feelings about this. Banking services cost money, and when the bank does not charge me it does charge others, probably people with less financial literacy.

I haven't seen a debit card fee since the last century when I started doing business with my present bank, which was a large, local, Louisiana bank at that time. There were still no debit card fees after my bank was bought out by CapitalOne Bank a few year back. F.'s bank doesn't charge a debit card fee either. Never has. These two banks have the lions share of customers of all financial capabilities in my area and have for many years. I don't think they charge debit card fees to anybody.

I don't feel like debit card fees are a penance that I must pay.

I also don't suppose that CapitalOne's bottom line is suffering all that much for lack of these fees.

 

[JOHNNIE36]

I'm a little confused by the debit card fees/no-fees and by which banks. Not that it matters to me, because I've already made up my mind that I will gladly pay the $5 fee to BOA if they do in fact levy that charge. I've been with them since they were Nations Bank and Barnnet before that. Never had a problem with that bank and they never charged me a fee for anything. The online banking is worth the $5 fee if they decide to charge one for the debit card.

The reason I'm a little confused is that I've not heard one word from the bank. No letter, no email, no nothing. Is this all speculation? Has anyone been officially notified by their bank that this would happen? I know, I've read all kind of things in the paper and heard various reports on TV but no notification by the bank.

 

[daystar]

I haven't used a bank in 10 years. I've been using credit unions. The fees at most credit unions are less than banks and they usually pay you higher interest too.

 

[Alan]

The reason I'm a little confused is that I've not heard one word from the bank. No letter, no email, no nothing. Is this all speculation? Has anyone been officially notified by their bank that this would happen? I know, I've read all kind of things in the paper and heard various reports on TV but no notification by the bank.

They only said they were planning to charge a fee. It now looks like they are re-thinking that decision

http://www.nytimes.com/2011/10/29/your-money/bank-of-america-rethinking-debit-card-fee.html

After setting off a firestorm of criticism from consumers, Capitol Hill and the White House, Bank of America is rethinking elements of its plan to charge customers $5 a month to use their debit cards.

 

[Ronnieboy]

I haven't used a bank in 10 years. I've been using credit unions. The fees at most credit unions are less than banks and they usually pay you higher interest too.

+1

Love my credit union

 

[chinaco]

The problem with banks is that they have tried to covert existing services to [larger]sources of revenue... fee revenue. There is not additional value to the customer. Plus, they have been reducing the service they offer to customer (picking away at it to reduce costs).


Banks have probably reached a ceiling for profit margin potential with the basic checking account (including ATM and debit card fees)... all they will do is alienate customers now.

People are tired of having fees added.

IMO - The basic retail bank has plateaued in terms of growth for that business unless they come up with completely new products or services. Since deregulation, some are broadening their services into other financial service areas. But the person running the retail bank is under pressure to achieve certain ROI and ROE. I think that low risk approach [exploit the existing customer base] to increasing revenue may be over.


If they want to grow revenue, they need to look into creating new service offerings that provide additional value.

 

[73ss454]

I walked into my bank today and one of the guys I'm friendly with there told me that they canceled the Debit Card Fee as of today. He said that the bank had so many people cancel their checking accounts that they had no choice. Now the powers to be want him to call all the people who canceled and try to get them back.

I jumped through a bunch of hoops to beat the fees by opening a credit card and move some other things around all for nothing.

Bean counters, idiots! See what the power of the people can do, I hope Washington is watching and listening.

 

[haha]

Yes but the value of that interest-free borrowing isn't very high these days. Banks used to lend at say 8% on a car loan. Now they lend at 4%. The value they get from your 0% deposit just dropped in half. They still have to give you the same banking service as before. A fee makes up some of the difference.

How about those 18% credit cards? The banks are experiencing excellent spreads. I don't think we need shed any tears for them.

I've been a B of A customer for 40 years, but this fall AMF!

Ha

 

[Texas Proud]

I walked into my bank today and one of the guys I'm friendly with there told me that they canceled the Debit Card Fee as of today. He said that the bank had so many people cancel their checking accounts that they had no choice. Now the powers to be want him to call all the people who canceled and try to get them back.

I jumped through a bunch of hoops to beat the fees by opening a credit card and move some other things around all for nothing.

Bean counters, idiots! See what the power of the people can do, I hope Washington is watching and listening.

Don't blame the bean counters for upper management's stupid decisions...

 

[RockyMtn]

Do we thank the "Occupy" folks for this about face?

 

[MichaelB]

Let's, uh, try to limit our political comments to the politics forum...

 

[73ss454]

Don't blame the bean counters for upper management's stupid decisions...

Where do you think they got the information from to make the decision?

 

[73ss454]

Do we thank the "Occupy" folks for this about face?

Why, do you think any of them have Debit Cards?

 

[thefinancebuff]

How about those 18% credit cards? The banks are experiencing excellent spreads. I don't think we need shed any tears for them.

Not all banks have a large credit card portfolio. For instance according to this earnings release

https://www.wellsfargo.com/downloads/pdf/press/3Q11_Quarterly_Supplement.pdf

Wells Fargo had $760 billion in loans and $800+ billion in deposits as of 9/30/2011. Only $22 billion (3%) were credit cards. Typically about half of the credit card customers don't carry a balance. A good portion of that $22 billion don't bring in interest because they are paid in full every month. Then you have to account for charge-offs -- uncollectible loans. Wells Fargo's charge-off rate on the credit card portfolio was 4.9% in 3Q 2011.

Lending to people who must pay 18% interest is quite risky. You will see if you try it on a P2P lending site like Lending Club or Prosper.

 

[mystang52]

I live in New Jersey, just outside NYC, so maybe it's different in my area. But, in my entire adult life I have never paid for a checking account (including no minimum balance), or Debit card, or debit card fees. And I get excellent service from the few times per year that I go into the branch for help.
Maybe I am naive, but I have to think that, due to competition, there is always a local bank that offers the same deal, wherever one lives. It can be a temporary hassle to switch banks, if one has auto-pays set up, but that hassle is short-lived.

 

[jayc]

Yes but the value of that interest-free borrowing isn't very high these days. Banks used to lend at say 8% on a car loan. Now they lend at 4%. The value they get from your 0% deposit just dropped in half. They still have to give you the same banking service as before. A fee makes up some of the difference.

Can't banks also go to the fed window and borrow $ at 0.25%. That is still a nice spread I would take all day every day.

 

[RockyMtn]

Why, do you think any of them have Debit Cards?

No I don't but I was told too keep my politics to myself.

 

[thefinancebuff]

Can't banks also go to the fed window and borrow $ at 0.25%. That is still a nice spread I would take all day every day.

They can but they don't unless there's a special need. If you look at the Wells Fargo earnings release supplement I linked in the previous post

https://www.wellsfargo.com/downloads/pdf/press/3Q11_Quarterly_Supplement.pdf

you will see WF had $760 billion in loans outstanding, funded by $880 billion in deposits. How much did they borrow from the Fed? Not $760 billion or $880 billion for sure. They actually noted that too much in deposits lowered their net interest margin.

NIM down 17 bps driven primarily by strong deposit flows, 12 bps impact