Bank Debit Fees Driving Consumers to aSmarterChoice.org Posted by AVCU on 1:01 PM

According to a Washington Post article, the banking industry is on the defensive over controversial new fees on debit cards in the wake of interchange price control legislation. Democrats have gone so far as to suggest that consumers should abandon financial institutions that impose the charge. A byproduct of the outrage over new fees is that online interest in credit unions is skyrocketing.

Rep. Brad Miller (D-N.C.) introduced a bill that would make it easier for customers to close their accounts and prohibit banks from assessing fees for the process. Meanwhile, Sen. Richard J. Durbin (D-Ill.) sent a letter to community banks and credit unions in his home state urging them to “seize this competitive opportunity” to woo consumers away from larger institutions.

“Politicians may not have the highest approval ratings, but I don’t think Wall Street banks and credit cards do either,” Durbin said.

Earlier this week, President Obama criticized the move as a way for banks to pad their profits at the expense of consumers. The American Bankers Association, a trade group, fired back Tuesday, accusing Washington of attempting to control private-sector prices. “It’s disappointing and puzzling that the president would attack a private corporation for responding to government price-fixing that has fundamentally altered the economics of offering a debit card,” ABA President Frank Keating said.

Credit unions and other financial institutions like USAA, which typically outscore commercial banks in consumer approval and satisfaction surveys, are turning the outrage into opportunity. CUNA said traffic on its Web site, www.aSmarterChoice.org, has jumped eightfold since news of Bank of America’s fee. “Our point is, if you’re upset, you should do something about it,” CUNA chief executive Bill Cheney said. Even though nearly all credit unions are exempt from the new interchange price controls, they continue to oppose the new rules, citing concerns that the market would eventually force them to accept lower debit-card revenue anyway.

Read the full Washington Post article.