Banks to charge monthly debit fee

“I think it’s really ridiculous that the banks keep adding on more fees to automatically take money away from customers,” Chase user Austin Jackson ’15 said in an email. “The average American is struggling right now, and to automatically dip into their money and take more to keep themselves satisfied at the despair of millions of customers is not right.”

The issue is particularly pressing since Bank of America and Chase are two of the most popular and convenient banks for University students, with ATM locations at such busy areas as Frist Campus Center and Nassau Street.

While Chase and Wells Fargo have been testing $3 flat fees for standard debit card accounts in various regions, the Sept. 29 announcement by Bank of America of a $5 charge has received arguably the greatest consumer criticism.

“It’s so inconvenient,” said Margaret Wang ’14, who uses her Bank of America debit card to access her personal money instead of her parents’. “Now my parents don’t want me to use it … and what’s the use of having a debit card if you can’t spend it?”

Although ATM use and person-to-person transfers are not subject to the fee, some students are reluctant to rely on withdrawing cash regularly regardless of their desired transfer. For example, Bank of America customer Sam Gichohi ’14 said that, since the ATM is so out of his way, he will probably spend less in general to save on the $5.

In the wake of these announcements, regional credit unions nationwide are becoming increasingly attractive as an alternative banking option. The Princeton Federal Credit Union, a member-owned, not-for-profit regional financial institution, has reported strong sign-up rates over the past month.

A few students, including Jackson, said they were considering transferring their accounts.

Raymond Zhong ’14 said he transferred from a Bank of America account to a PFCU account over the summer. The decision has made it more geographically convenient for him to go from his residential college, Forbes, to withdraw money from the ATM in the Wawa on University Place.

“Overall, parts of Bank of America’s customer service experience did not feel in my best interest,” he said. For him, the additional fees “definitely confirm [that feeling].”

Economics senior lecturer Elizabeth Bogan said that for all the public discontent, such fees were an “obvious” result of an “ill-conceived concept.”

“The whole approach was symbolic of regulatory overreach, where regulators are trying to make tiny microeconomic decisions with a blunt instrument like price controls,” Bogan said. “Over and over again, governments try price controls in the name of the little guy, and they always screw the little guy.”

The PFCU opened 14 new student membership accounts in the two weeks following the Sept. 29 Bank of America announcement — more than their monthly average of 10 student accounts, according to PFCU business development specialist Judith Gernhart. Overall, 34 accounts were opened over the two week period, slightly above pace for the average 53 new accounts opened per month.

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As of Oct. 14, Princeton students made up 15.6 percent of the credit union’s 7,843 accounts in the Princeton region, up from 15.5 percent before the change.

Gernhart noted that the credit union has seen more students, faculty and other regional consumers inquiring about membership in light of the additional fees, though it cannot track specifically whether the increase of memberships is a result of the added charges in other banks.

“I think you’ll really see a pickup once [students] see the fees on their statements,” Gernhart said. “As long as people are aware and knowledgeable and shop around, then it benefits us.”

PFCU, which has ATM machines in Frist and a branch on the 7th floor of the New South Building, wants to expand its marketing to University students. Currently, the credit union advertises at Freshman Check In, Graduate Student Information Fairs and other on-campus events. In mid-October, PFCU’s Director of Marketing held a seminar about credit unions, hosted by the Frist Center Stage student programming board.

PFCU also serves the The Hun School of Princeton, The Lawrenceville School and The Pennington School.

With the new policies, banks are reacting against the enhanced financial regulations outlined in the Dodd-Frank federal law, specifically the Durbin Amendment that limits the fees banks can levy on a merchant in a debit card purchase. The fees that used to be placed on the merchant have now shifted to the consumer.

Bank of America spokesperson Betty Riess said in a statement that the customers who do not want to pay the fee for a debit card purchase can continue to get cash from ATMs, access their accounts online, use person-to-person transfers or upgrade to certain premium accounts.

“This new fee allows us to continue to offer the service and convenience customers have come to expect from Bank of America,” she said. “Our objective is to be clear, predictable and transparent about our fees and we have structured our products so that customers understand what they are getting and how much it costs.”

For some students, however, the motivating factors in deciding where to put their money are still convenience and practicality, rather than whether they will pay extra fees. Students said they often defer to their parents’ opinions when opening a new bank account and that they prefer well-known, widely available banks. Many said they did not know what the PFCU was.

“I like to walk into a bank to do my banking as opposed to online. I’m old-fashioned in that way,” said Breanna McMahon ’14, a California native who opened a Chase account before her freshman year. “I wanted a bank that had branches back home and here.”

On the other hand, other students even expressed apathy over the new fees and found that it would be too inconvenient to transfer to a different account. Several, in fact, did not know of the policy changes and do not regularly read updates from their banks.

“Five dollars a month is not that much anyway. There aren’t that many alternatives to Bank of America in Princeton,” Daniel Condo ’12 said. “Even if they charged me $10 a month, I would still stay with Bank of America.”