Debit card fees spark surge in local banks, credit unions

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Debit card fees spark surge in local banks, credit unions

By GRANT MARTIN
gmartin@islandpacket.com
Published Wednesday, October 19, 2011   |  653 Words  |  

When Bank of America announced in September it would charge basic checking-account customers $5 each month to use their debit cards, the decision had an immediate impact on the American banking landscape.

As other large national banks consider similar fees, disaffected customers are turning to smaller banks and credit unions, including those in Beaufort County."We're seeing more opportunities from people who had been banking at larger places," said Chrissie Casas, a regional manager for S.C. Bank and Trust, which counts almost 19,000 customers among its five branches in Beaufort County.

Casas estimated inquiries from potential new customers at local branches has increased 20 percent, a rate SCB&T president John Windley said was consistent with new interest at the bank's 46 locations statewide.

At Mount Pleasant-based Tidelands Bank -- with seven branches, including one in Bluffton -- the interest in new accounts since Bank of America's announcement has been strong.

"It's wonderful," said Bobby Mathewes, chief community banker at Tidelands. "I'd venture to tell you that most every community bank has received all kinds of emails and phone calls the past few weeks."

Local credit unions are also witnessing a spike in new membership.

"Basically, the past four months has seen the highest increase in new monthly activity we've ever had," said Aisha Rasul, spokeswoman for the Navy Federal Credit Union, which has five branches in Beaufort County.

A spokeswoman for the S.C. Federal Credit Union also said interest in new membership there is substantially higher today than a month ago.

Although the new fees won't take effect until 2012, local credit unions are capitalizing on public backlash by launching campaigns promoting their free accounts.

Last week, 32 credit unions in South Carolina announced a pledge to continue offering customers free use of their debit cards. The Navy Federal Credit Union did not participate in that pledge, but its website prominently features the message, "Our checking comes with a FREE debit card, unlike the other guys."

A NATIONAL MOVEMENT

Around the country, long-standing "free checking" promotions appear to be ending.

According to an August study by Bankrate.com, only 45 percent of banks currently offer free checking, compared with about 75 percent two years ago.

Credit unions, already benefiting from that decline, are now seeing a sharp increase in interest as debit-card fees are announced.

"How much it will translate into new memberships remains to be seen, but a number of credit unions are already seeing a spike in new accounts," said Bill Cheney, CEO of the Credit Union National Association.

With interest rates at historic lows, banks are struggling to make money through loans to consumers and businesses. That, along with the passage in June of the federal Durbin Amendment, which caps the amount banks can charge retailers for debit card transactions, is spurring the implementation of the fees.

Bank of America's loss is in the billions of dollars, according to its CEO, Brian Moynihan.

Bank of America isn't the only large bank to levy debit card fees. Suntrust announced a $5 fee, and Wells Fargo and Chase are experimenting with a $3 fee.

Earlier this month, Citigroup announced a new $20 monthly checking account fee for customers who don't maintain at least $15,000 in their combined accounts.

Large banks are also considering other ways to raise revenue, such as increasing fees for paper statements and charging more for using ATMs outside their networks.

Don Worthington of The (Rock Hill) Herald contributed to this report.

Follow reporter Grant Martin at twitter.com/LowCoBiz.

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Local banks and credit unions won't charge fees for debit card use, October 11, 2011