Banks Back Away from New Fees, Focus on Cost Cutting Instead

The financial world's fee fever may have abated -- for now.

On Friday, Bank of America (BAC) seemed likely to add more ways for customers to avoid the $5 debit-card fee after coming under severe criticism since it announced the new fee in September.

A person familiar with the bank's plans said that the altered rules would allow many customers to avoid the fee by maintaining minimum balances, using direct deposit for paychecks, or by using Bank of America credit cards, Reuters reported.

Other big and medium-sized banks including J.P. Morgan Chase (JPM), Citibank (C) and Key Bank (KEY) say they're not implementing fees for debit card use anytime soon, reported the The Wall Street Journal.

Still, the banks are looking for ways to make up for the revenue lost under new federal regulations enacted earlier this month, and to compensate for low interest rates. (Banks aren't making much money off your money these days.) That has translated into cost-cutting at some institutions. For customers, that could mean fewer real people to help you bank and more emphasis on ATM and online banking.

Last June, Wells Fargo (WFC) announced plans for cost cutting through streamlining technology and by pushing customers to use more online and mobile services, which would reduce the need for staff.

Regional banks are on a cost cutting kick as well. Cleveland-based Key Bank has reduced processing costs associated with checking accounts, says David Bowen, its head of consumer products. The bank has also rolled out a rewards program to increase customer participation in automated banking.

The Connecticut Post
reported that Webster and People's United banks could implement cost cutting moves in response to a decline in revenues caused by a squeeze on interest margins. Quite simply, banks are making less when they lend money out, thanks to today's lower interest rates.

FirstMerit Bank, which has more than 200 branches in Ohio and Pennsylvania, also said it would undergo cost-cutting measures, The Plain Dealer reported, though what those will look like are not yet clear.

BB&T, the18th-largest bank in the United States, this week asked bank managers to to come up with ways to cut costs, but has not announced specific measures, Reuters reported.



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fishlover

Use someone else money charger them fees.

November 01 2011 at 4:42 PM Report abuse rate up rate down Reply
George

Ron Paul for president! End the non-Federal no-Reserve banking scam!

November 01 2011 at 4:28 PM Report abuse rate up rate down Reply
Gilbert

The banks are too lazy and CHEAP to create new products and services to sell and profit from like any other business. Hell they cost MONEY! It costs them nothing to implement a FEE! Zero cost and 100% profit. FREE MONEY!

Their first response to any downturn in revenues is the Kneejerk No Cost FEE! It's the Lazy Man's way to recover lost revenue. And they've become addicted to it.

They Government has to implent rules to break their addiction and FORCE them to start investing some money into creating new products and services to sell to maintain their cash flow, like all other businesses do.

November 01 2011 at 3:59 PM Report abuse rate up rate down Reply
broadwaytool

How can they say that the banks aren't making as much money off of our accounts? The first thing they did was raise the interest rates on balances that were incurred on lower rate agreements. (they told me 9% I charges a couple of grand then they raised it to 14.9%) So they are making more money off of my account then they were before. Now times that by a few million people.

November 01 2011 at 3:15 PM Report abuse +2 rate up rate down Reply
Linda

Too late...they've lost my trust for even considering such a notion. I've switched to a credit union that charges nothing, and pays me interest for keeping my checking account with them.

November 01 2011 at 2:49 PM Report abuse +2 rate up rate down Reply
antipodal2u

Yeah sure. Theyll either wait, or change tactics and find another way to fleece thier customers

November 01 2011 at 2:46 PM Report abuse +1 rate up rate down Reply
MICRON TOOL

Bull shib there not making any money....I went to a credit union with my personal account and soon will be taking my company account to a credit union

November 01 2011 at 2:02 PM Report abuse +1 rate up rate down Reply
sksnyder25

Michelle - read the article. BOA made 6 BILLION DOLLARS last quarter. They are not about to fail so stop all your doom and gloom. The financial reform law enacted under President Obamam may be weak but it certainly was better than what we had under Bush - no law whatsoever which caused all this financial mess.

November 01 2011 at 1:49 PM Report abuse -3 rate up rate down Reply
1 reply to sksnyder25's comment
Michelle

It is not an issue of me being doom and gloom as you characterized concerning BOA massive $ 75 trillion derivatives transfer to FDIC which taxpayers in this country or even in total world wealth can ever pay back in the next 50 years, it is the following misformation you eschew which needs correcting that BOA is overly profitable:

"The Charlotte, N.C., bank posted net income of $6.2 billion, or 56 cents a share, compared with a net loss of $7.3 billion, or 77 cents per share, in the year-earlier quarter.

Asset sales and cost cutting helped boost Bank of America's profit last quarter, including a gain from a $3.6 billion sale of BofA's stake in China Construction Bank.

Bank of America also generated an additional $1.7 billion from a disquieting gain. Banks can essentially book gains on their balance sheet when credit spreads move higher. That happens when trading partners grow more concerned about doing business with a bank, thus charging more for transactions.

With the exclusion of one-time events, Bank of America's third-quarter profit comes closer to $700 million, said Jefferson Harralson, a banking analyst at Keefe, Bruyette & Woods, Inc.

Read more: http://www.wbaltv.com/money/29515593/detail.html#ixzz1cTujM5CF

November 01 2011 at 3:00 PM Report abuse rate up rate down Reply
Ruth

If you don't retain a monthly Direct Deposit in Chase you can AVOID a $12.00 monthly fee by keeping a minimum daily balance of $1500.00 per day in your checking account. So if you go go below $1500.00 you see on your next monthly statement $12.00 extra has been deducted for the Banks services. Either way the bank makes money on your money and the rich get richer.

November 01 2011 at 1:46 PM Report abuse +2 rate up rate down Reply
1 reply to Ruth's comment
augiedog55

Ruth, Move your $ its quite simple. The only way hey get rich is if you let them

November 01 2011 at 2:13 PM Report abuse +1 rate up rate down Reply
mily469

and we didn't even have to pay lobbyists to get this done! i will stick with my small local community bank tho.

November 01 2011 at 1:42 PM Report abuse -1 rate up rate down Reply