Money & Company

Tracking the market and economic trends
that shape your finances.

Category: E. Scott Reckard

Real Estate | Autos | Consumer | Economy

Bank of America abandons plan to charge $5 debit card fee

Bowing to a national flood of protests, Bank of America Corp. is calling off its plan to charge customers $5 a month for using its debit cards to make purchases -- a strategy that proved a public relations disaster for what once was America's biggest bank.

Analysts had believed the rest of the banking industry would follow BofA in imposing similar fees to make up for new rules restricting the fees banks charge merchants for accepting debit cards.

But instead, the Charlotte, N.C., banking giant finds itself following the lead of a host of rivals who decided last week not to incur the wrath of the American public with debit-card fees.

Bank of America lost its No. 1 ranking in asset size to JPMorgan Chase & Co. at the end of September, though it still has the most total deposits. It announced its decision on the debit fee Tuesday morning in a two-paragraph statement citing "customer concerns and the changing competitive marketplace."

“We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” David Darnell, BofA's co-chief operating officer, said in the statement.

“Our customers’ voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”


BofA backpedals on $5 debit fee

Chase opts out of debit-card fee

Another fee bites the dust: Wells Fargo backs off debit charge

-- E. Scott Reckard

Photo: Bank of America headquarters in Charlotte, N.C. Credit: Getty Images / Davis Turner 

Another fee bites the dust: Wells Fargo backs off debit charge

Wells branch-credit Paul Sakuma AP
Joining an industry's retreat in the face of customer protests, Wells Fargo has abandoned the idea of charging debit card fees -- the third major bank to back away from such plans in a day.

The San Francisco banking giant had planned to test a monthly $3 fee for users of its debit cards in five states. It said in a statement Friday that it had called off that pilot program "as a response to customer feedback the bank has received."

"We will continue to stay attuned to what our customers want," said Ed Kadletz, head of Wells Fargo’s debit card division.

A host of critics including President Obama have attacked Bank of America's plan to charge account holders $5 a month if they use their debit cards to make purchases. The populist outrage, highlighted by protests staged by the Occupy Wall Street movement, has caused other major U.S. banks to hold off on imposing similar fees.

Earlier Friday, Bank of America backpedaled, saying it would make it easier for its customers to avoid the fee by waiving the charge if they also used BofA credit cards, maintained minimum account balances or made certain direct deposits. Details of the revised plan had not been finalized, a person familiar with the changes said.

Also Friday, JPMorgan Chase said that after its own eight-month testing of $3 monthly debit card fees it had decided against imposing them on its customers.

Citibank, US Bank and Union Bank are among other major institutions that have now taken the no-debit-fee pledge. However, certain regional banks, such as SunTrust and Regions, already have implemented fees similar to those at Bank of America.

It will be interesting to see what other new charges the banks cook up as they try to make up for revenue lost to new regulations governing credit card, overdraft and debit card practices that were imposed in the aftermath of the financial crisis.   


BofA backpedals on $5 debit fee

Chase opts out of debit-card fee

Debit card users may switch banks over new fees

-- E. Scott Reckard

Photo: Wells Fargo in San Francisco. Credit: Paul Sakuma / Associated Press

BofA backpedals on $5 debit fee

BofA Sign-RTS-Lucas Jackson
Bank of America plans to make it much easier for customers to dodge its planned $5 monthly fee for debit cards, a person familiar with the bank's strategy says.

The $5 fee, which has triggered a storm of criticism, isn't going away. But under proposed revisions to the plan, "most of our customers won't pay it," according to the person, who spoke on condition of anonymity because the changes haven't been finalized.

Bank of America initially had said it would waive the fee only if a customer had a BofA mortgage or $20,000 in accounts at the bank and its Merrill Lynch brokerage.

It's now planning on lowering the minimum balance requirement significantly, although the final figure hasn't been set. Customers also would be able to dodge the charge by using BofA credit cards or making certain direct deposits.

The bank is going to start charging the debit card fee at a yet-to-be-determined time next year.


Chase opts out of debit-card fee

Citibank is next with a new banking fee

Survey: Debit card users may switch banks over fee

--E. Scott Reckard

Photo credit: Lucas Jackson / Reuters

Chase opts out of debit-card fee


This post has been corrected. See below for details.

Another bank seems to have figured out what Bank of America Corp. has found out: charging for use of debit cards could chase customers away.

JPMorgan Chase & Co., which for eight months has been dinging its Georgia and northern Wisconsin customers $3 a month for using debit cards, said Friday it has decided to end the test next month and won't impose the fee anywhere.

There was no official announcement, but a person who had been briefed on the matter said the bank's customers preferred a program it calls Chase Total Checking.

That's a package that charges checking customers $12 a month ($10 monthly in California, Oregon and Washington) but waives the fee if they have at least $500 direct-deposited each month, or keep at least $1,500 in the account, or have a total of $5,000 in linked Chase accounts.

A host of critics including President Obama have attacked BofA's plan to start charging account holders $5 a month if they use their debit cards to make purchases (ATM transactions are free).

Citibank has said its customers really hate the idea of debit card fees. It has raised its fee for a basic checking account but has said it won't impose a debit fee.

US Bank also has said it has no plans for such a fee, although Wells Fargo has begun conducting its own tests of a $3 monthly charge and some regional banks like SunTrust, a big presence in the Southeast, have started charging a fee similar to BofA's.

Bank customers across the country have expressed "outrage" over the BofA fee, according to Norma Garcia, who heads up a financial-services program for Consumers Union, the advocacy arm of Consumer Reports.

"It's time for Bank of America to listen to its customers who are saying loud and clear: drop the fee or we'll drop you," Garcia said in a statement. "All banks that are considering debit card fees should ditch those plans."

BofA Chief Executive Brian T. Moynihan said this week that he’s “incensed” by public criticism of his company and is pushing back by reminding local leaders of its contributions to their economies.

[For the Record, 1:44 p.m. Oct. 28: An earlier version of this post indicated that Citibank had tested debit card fees. Citibank did not impose a debit card fee on a test basis, but it surveyed its customers, who opposed the idea of fees.]


Citibank imposes higher checking charges -- but no debit card fee

Debit cards poised to get much costlier

Survey: Debit cards users may switch banks over new fees     

--E. Scott Reckard

Photo credit:  Elaine Thompson / Associated Press

Mortgage rates flat, Freddie Mac says, but hike may be near

The typical fixed rate for a 30-year home loan edged barely lower this week, Freddie Mac said
The typical fixed rate for a 30-year home loan edged barely lower early this week amid mixed economic data, Freddie Mac said.

But news that the U.S. economy is growing and that European leaders have reached a deal to reduce Greece's staggering debt load could push the cost of borrowing back higher.

Freddie Mac said Thursday in its weekly report that the 30-year rate averaged 4.10% this week for solid borrowers who paid 0.8% of the loan amount in lender fees and discount points. That was down a notch from 4.11% last week.

The typical 15-year fixed rate held steady at 3.38% with an average of 0.7% of the loan amount paid in extra fees upfront.

Freddie Mac asks lenders across the country what rates they are offering to borrowers who pay only small fees to get the loans. The rates are for borrowers with solid credit and 20% down payments or home equity.

Freddie Mac economist Frank Nothaft said housing market indicators were mixed, with consumer confidence soft, house prices largely flat and new home sales up -- but from very low levels.

However, today's good news on the European debt crisis and the U.S. economy, which the government said grew 2.5% in the third quarter, may exert some pressure for higher rates.

When things are looking better, fewer investors tend to seek shelter in U.S. Treasury securities. That in turn could send the yield on the 10-year Treasury higher, and mortgage rates generally follow the lead of that benchmark.

Sure enough, the 10-year Treasury yield was moving higher early Thursday.


Economy grows at 2.5% in third quarter, easing recession fears

Asian stocks, euro rise on European rescue plan

Will Europe's rescue plan work? Watch the bond market

-- E. Scott Reckard

Photo: Homes for sale in Santa Clarita last month. Credit: Kirk McKoy / Los Angeles Times

City National profit rises 20%

City National Bank branch

City National Corp.'s third-quarter profit rose 20% despite the sluggish economy, with commercial loan balances up 15% from a year earlier and a continuing surge in deposits at the private bank and business lender.

This post has been corrected. See note at bottom for details.

The L.A.-based parent of City National Bank said it earned $41.4 million, or 77 cents a share, compared with $34.4 million, or 65 cents, in the third quarter of 2010. The bank's revenue totaled $269 million, up 6% from $255 million a year earlier but down 5% from the second quarter.

The results, which missed Wall Street's expectations of 83 cents a share, were announced after the close of trading Thursday. In regular trading, City National shares had risen 41 cents, or 1%, to $40.83. The stock is down more than 22% over the last year.

City National said it made its first provision this year for loan losses: $7.5 million. Like many other banks, it also is seeing tighter profit margins on its basic business of accepting deposits and making loans because interest rates are so low.

Chief Executive Russell Goldsmith said total assets were up 6% from a year earlier and had topped $23 billion for the first time at the end of the quarter. Deposits, at $19.7 billion, were up 8% -- a reflection of how cautious City National's clientele of business owners and other affluent individuals remain in what Goldsmith described as the tepid economy.

"Corporate America is hoarding cash," Chief Financial Officer Chris Carey said during a conference call with analysts. "And high-net-worth clients, I can tell you, are hoarding cash."

In other L.A.-area bank earnings, Pasadena's East West Bancorp said Wednesday that its net income rose 33% in the third quarter to $62.4 million on strong loan growth. Cathay General Bancorp of Los Angeles said its quarterly profit was up 51% at $26.1 million, with fewer delinquent loans and a jump in commercial lending.

[For the record, 6:52 p.m.: An earlier version of this post said East West Bancorp announced earnings Tuesday. The announcement was Wednesday.]


Smaller banks pledge not to impose debit-card fees

East West Bank overtakes City National in stock-market value

City National Bank goes a little bit country

-- E. Scott Reckard

Photo: City National Bank branch at Wilshire Boulevard and Fairfax Avenue in Los Angeles. Credit: Eduardo Aparicio via Flickr

Average 30-year mortgage rate remains above 4%, Freddie Mac says

Freddie sign - AP - Pablo Martinez Monsivais

The typical rate for a 30-year mortgage has leveled off at a bit over 4%, a widely watched survey shows.

Lenders were offering the standard 30-year home loan at an average of 4.11% early this week, a statistically insignificant drop from 4.12% last week, Freddie Mac said Thursday.

The week before last, the survey showed the average lender offering rate at 3.94% -- the first reading under 4% in the 40-year history of the Freddie Mac survey. Not surprisingly, applications for mortgages have tailed off with the increase in the rate, a separate Mortgage Bankers Assn. report showed.

In the latest Freddie Mac rate survey, the 15-year fixed home loan averaged 3.38%, up from 3.37%. Borrowers would have paid an average 0.8% of the loan amount in fees and discount points to obtain the rates on the 15- and 30-year mortgages, Freddie said.

The survey asks lenders for popular combinations of rates and fees they are offering to borrowers who have good credit and can make at least 20% down payments or have at least 20% equity in homes they are refinancing.


Home starts rise

More Californians enter foreclosure

Investors demand higher rates on state bonds

--E. Scott Reckard

Photo: Freddie Mac says lenders were offering the standard 30-year home loan at an average of 4.11% early this week, a statistically insignificant drop from last week. Credit: Pablo Martinez Monsivais / Associated Press

Wells Fargo profit up, but stock falls as revenue slips

Wells Fargo & Co.'s profit jumped 21% as it sorted out bad-loan troubles and cut costs, but Wall Street slammed the San Francisco bank as its third-quarter revenue declined.

Some key measures of profitability also dropped at Wells Fargo amid the weak economy and falling interest rates. The bank's shares plunged $1.88, or 7%, to $24.70 in midday trading, although its stock-market value, at about $130 billion, remained the highest in the industry.

Wells Fargo, the fourth-largest U.S. bank as measured by assets but the largest consumer lender, said Monday it earned $4.06 billion, or 72 cents per share, compared with $3.34 billion, or 60 cents per share, in the third quarter of 2010.

Loans and deposits both rose during the quarter. But revenue fell 6%, from $20.87 billion to  $19.63 billion, as its income from interest, fees and trading declined.

Another megabank, New York's Citigroup Inc., said Monday it earned $3.77 billion, or $1.23 per share, up from $2.17 billion, or 72 cents per share, in last year's third quarter. Citi shares fell 36 cents, or 1.3%, to $28.04 at midday.

Archrival Bank of America Corp., which reports its earnings Tuesday, recently disclosed plans to start charging customers $5 a month for using debit cards, triggering waves of protest from consumers and politicians.

During the Wells Fargo earnings call, analyst Chris Kotowski of Oppenheimer & Co. suggested the $5 fee might become an industry standard. By his calculation, that would largely offset revenue big banks have lost as a result of the Federal Reserve cutting in half the amount they can charge merchants who accept debit cards for payments.

Wells Chief Executive John Stumpf was guarded in commenting on how his bank would proceed on that controversial front, referring to a pilot program, just started in a few states, of a $3 monthly fee for customers who make purchases with debit cards.

But Stumpf said Wells Fargo, while proceeding cautiously on raising fees, needs to be compensated for the cost of providing customers safe and easy access to their deposits, including online and mobile banking as well as debit cards and the biggest national network of more than 6,000 branches.

"Our customers are going to tell us ... how they'll pay for those services," Stumpf said.

Continue reading »

Mortgage rates under 4% becoming harder to find, Freddie Mac says

Freddie sign - AP - Pablo Martinez Monsivais
Fixed-rate 30-year mortgages beginning with a "3" are becoming harder to find, as the latest Freddie Mac survey of lenders shows.

The big government-controlled loan buyer reports that lenders were offering the loans to well-qualified borrowers early this week at an average rate of 4.12%. That was a jump higher from 3.94% a week earlier, the only sub-4% rate recorded in the survey's 40-year history.

As usual in  the Freddie Mac survey, borrowers would have paid less than 1% in upfront lender fees to obtain the loan. Rates lower than those in the survey often are available to solid borrowers who shop around or pay additional points upfront.

Rates for 15-year fixed loans and adjustable-rate mortgages also rose, according to Freddie Mac,  which looks at loans of up to $417,000.

Jumbo mortgages, which vary by region but are defined as more than $625,500 in much of coastal California, were running more than half a percentage point higher, with Wells Fargo listing its jumbo rate at 4.75% Thursday morning.

Freddie Mac economist Frank Nothaft said a better-than-expected unemployment report had fewer investors running for the safety of U.S. government securities.

That pushed the yield higher on the 10-year Treasury note, and mortgage rates followed as they usually do.

"The economy added 103,000 workers in September, aided by the return of striking Verizon workers," Nothaft wrote. "In addition, revisions to July and August figures added a total of 99,000 jobs to payrolls."

Thus, as so often happens, better news for the economy meant higher rates for people buying or refinancing houses.


Home foreclosure proceedings on the rise again

10-year Treasury note yield at six-week high as haven demand ebbs

Weak demand at Treasury note sale drives rates up

--E. Scott Reckard

Photo: Freddie Mac headquarters. Credit: Pablo Martinez Monsivais / Associated Press

Smaller banks pledge not to impose debit-card fees [Updated]

City National
Regional and community banks such as L.A.'s City National Corp. and Chula Vista's PacTrust Bank are lining up to take the anti-Bank of America pledge: no debit-card fees. For now, at least.

It's an appealing come-on following BofA's decision to charge customers $5 a month to swipe the cards -- even for bankers who say new Federal Reserve regulations have unfairly capped what they can charge merchants for accepting the cards.

"Given the state of the economy and the political environment, we think it's the wrong time to pass that cost on to our clients," City National Chief Executive Russell Goldsmith said in an interview.

Depositors "want to be valued as a customer," PacTrust Chief Executive Gregory Mitchell said. "This seems to be a forgotten principle among the major banks."

Forswearing the debit-card charge is easier for banks and credit unions with less than $10 billion in assets, such as PacTrust, since they are exempt from the new limits on the allowable fees charged to merchants who accept debit cards. City National Bank, with $22 billion in assets, gets no such pass.

Bank of America representatives said consumers should compare all costs plus factors such as ATM availability before deciding where to bank.

Citibank, for example, has said it won't impose a fee for debit-card use, but it charges $10 a month for a basic checking account unless customers have $1,500 in deposits or they sign up for certain automatic deposit and bill-payment services.

PactrustlogoPacTrust is expanding beyond its base in San Diego and Riverside counties into Los Angeles and Orange counties and is looking to pick up new customers. It offers a basic checking account that is free with no minimum deposit.

City National says customers can avoid checking account fees by keeping an average of $3,500 on deposit.

Bank of America customers can avoid the debit-card charges by using them only at ATMs and not for purchases, by having a Bank of America home loan, or by having $20,000 on deposit.

[For the record, 12 p.m. Thursday, Oct. 13: An earlier version of this story reported incorrectly that Citibank charges $20 a month for a basic checking account; the monthly fee is $10.]


Bank of America to charge $5 monthly fee for debit card purchases

Debit cards poised to get much costlier

BofA debit card fee prompts animosity from coast to coast

--E. Scott Reckard




BofA says website working properly again

MoynihanBloombergJeff Kowalsky 
Bank of America Corp.'s woebegone website appears to have perked up again after six days of sporadic outages and slowdowns.

"We're taking it day by day," spokeswoman Tara Burke said, characterizing the system as operating normally Thursday.

"It's getting better," Burke said, a statement affirmed by a dozen BofA customers who said the problems with the website had been corrected.

The nation's biggest bank, with 29 million online customers, has been getting ready to introduce new features and had switched many users to a new system in September, Burke said.

She said that process, combined with an end-of-the-month flood of payroll deposits and bill payments, caused widespread malfunctions beginning last Friday and continuing until Wednesday.

The foul-ups added to the headaches of BofA Chief Executive Brian Moynihan, who touched off fireworks of protest last week with his plan to charge customers $5 a month to make purchases using their debit cards.

That plan hit the news Friday just before the online banking hit the skids, prompting waves of speculation that hackers had retaliated against the bank for the fee. BofA has consistently denied that its systems were compromised by outsiders, blaming itself for the problems.

Bank of America stock closed Thursday up 51 cents, or 8.8%, at $6.28 but was still down by more than 50% for the year.


Bank of America's website (and stock) are down again

Consumer confidential: Bank of America woes

BofA: Online banking outage was unrelated to debit fee uproar

-- E. Scott Reckard

Photo: Bank of America CEO Brian Moynihan's headaches include website woes. Credit: Bloomberg / Jeff Kowalsky


Recommended on Facebook


In Case You Missed It...