The new fees introduced by Bank of America and Citibank this week make me mad. Real mad.
I’m not a customer. In fact, their assault on the American people is great for PerkStreet’s business. But it still makes my blood boil. I’ve seen lives changed when people stop spending on credit and choose debit.
Honest Americans have tried to move away from credit card debt during the recession — revolving debt from credit cards has dropped from a trillion dollars in 2008 to just 800 billion in the U.S. It’s a drop of 20%. Good folks are fighting back, as Americans are wont to do.
If you’re using debit instead of credit, you are probably looking to get ahead of your bills by spending in a way that offers more control — and therefore the assurance you won’t spend more than you want or can afford to pay. Debit card fees are nothing more than corporate hands dipping into the pockets of honest people. These new fees are at best a tax on people looking to pursue the American dream of getting ahead through hard work, and at worst a slight of hand that destroys rather than creates wealth.
I’ve spent my career in and around financial services since my first job at the largest manufacturer of checks in the early ‘90s. I’ve worked for and consulted to lenders, investors, asset managers, insurance companies and deposit institutions. I can tell you with absolute certainty that financial institutions do not put their own profits at risk. Don’t be fooled into thinking that’s what this is about.
Charging for debit card transactions does two things: it taxes those who choose to use debit cards, which offer the most control over money and keep consumers on budget; and it puts those who switch to credit cards at risk of falling into debt (even if they fully intend to pay it off every month).
Trust me, Big Banks charging for debit card usage know they’ll earn more from customers every year than the sum of the fees. Why? Because over half of the credit card-carrying American population failed to pay their credit cards in full and carried a balance resulting in interest in the last 12 months. That means at least 1 in every 2 new credit card customers who migrate away from debit will likely end up paying credit card interest. Powerful behavioral psychology is at play when you use a credit card that makes it easy to spend more and get in trouble — and the banks know it.
Aren’t the Big Banks afraid of the customer backlash, the potential of rioting and angry tweets and Facebook posts?
Nope. They know the other members of the Evil Empire will follow suit — watch for more announcements to be made. Big Banks think the American people won’t realize they have a choice. Quietly paying the fees, not thinking there is an alternative.
Guess what Big Banks? America is waking up to the idea that you were able to get the people to own the risk while you owned the profit, which spurred on this financial crisis. And guess what else? They are waking up to the fact that alternatives do exist.
I’m proud to be building such an alternative and I’m thrilled that PerkStreet Financial is a refuge for Americans looking for a way of banking that rewards responsibility. I’m not against companies making a profit, just those that do it without ethical impulse. I’m glad there are a few other ‘good guys’ out there too.
If PerkStreet isn’t right for you because you like brick-and-mortar banking, check out a credit union or regional bank that has fee-free checking and no crazy terms to meet. Whatever you do, don’t stick with a bank that is taking money from the hands of real people to line their own pockets and destroying our country in the process.
What do you think about Big Banking’s new fees? How do you view debit cards in contrast with credit cards? Now it’s your turn to spout off in the comments below.
Photo: Ben Walther