by: Richard Elliot Updated:
Some Bank of America customers in Metro Atlanta are not happy about the bank's plan to charge $5 a month to use a debit card.
"I think it's excessive," said customer Nia Kelley outside a Norcross branch office. "I don't see the necessity, especially with all the things going on with the economy right now."
Bank of America’s plan comes after other big banks like Wells Fargo and Chase announced they are testing a similar plan.
Georgia Tech finance professor Dr. Sudheer Chava told Channel 2's Richard Elliot that the fees are the direct result of a new government regulation which cuts roughly in half how much the big banks can charge retailers for credit card transactions. That, he said, could cost the banks billions in revenue.
"So the banks think they are going to lose a lot of money on that," said Chava. "By an estimate from Bank of America, the annual letter to shareholders, they think they'll lose about $2 billion in revenue per year."
So, Chava said the banks are simply moving the fee to their customers to make up the difference.
In an emailed statement Bank of America said, "The price of a debit card was previously determined by the amount and type of transaction. We were able to pass some of these costs along to merchants but because of regulatory changes, we are adjusting our pricing to reflect today's economics."
Some think the cap on what banks can charge merchants would help businesses but Erika Nguyen, who works at the Pretty Nails Salon in Lilburn, isn't so sure. She believes the savings won't really make that much of a difference to the business but will make a difference to their customers.
"Our business is a luxury," said Nguyen. "It's not like people can just come in here whenever they want. I mean, that's why business is so down. So it probably will affect business if people were being charged $5 a month.”
While many Bank of America customers threatened to pull their accounts and take their banking elsewhere, Chava said the big financial institutions probably don't mind if they do.
"In my opinion, they think they'll lose some customers," said Chava. "But probably these are not the customers they're making a lot of money from."
The new fees are scheduled to go into effect next year.