Bank Of America: That $5 Debit Card Fee Everyone Hated Caused A 20% Spike In Account Closures
Via Business Insider:
We already tagged the now infamous $5 debit card fee as one of worst screw ups in finance in 2011.
Yesterday on Bank of America’s earnings conference call, CEO Brian Moynihan quantified the impact of the eventually pulled fee:
We saw an elevated level of account closings in the quarter, elevated from last year fourth quarter, but frankly, by, I’d say, 20% versus last year fourth quarter ‘10 to ‘11. But from ‘09, it’s actually still down in the fourth quarter of ‘11 versus fourth quarter of ‘09 by 20-odd percent. So you saw that, so there’s no question, and that’s why we pulled it back. And once we pulled it back, you saw that mitigate, and that will carry us in the first quarter. [emphasis added]
Moynihan went on to say, “yes, we had some impact from the $5 debit fee. That’s why we made a decision to reverse it.”
The proposed fee led to a 20% year-over-year increase in the number of account closings. Ouch.
During the fourth quarter, Bank Of America was also a target of increased criticism from Occupy Wall Street, which also could have led to the increase in closures.
