Big Bank Epiphany: Adding New Fees May Be Bad For Business

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Could 2013 be when big bank customers finally get some relief from the onslaught of fees they’ve weathered in recent years?

According to some bank industry analysts, the answer is a qualified yes. Fees aren’t going away entirely, and the experts say penalty fees in particular will continue to creep higher, but a new regulatory climate in Washington has put banks on notice that piling on costs is not the best way to do business.

“The whole landscape changed after the election,” says Ken Thomas, an independent bank consultant and economist. With Obama in the White House and celebrated Wall Street watchdog Elizabeth Warren in the Senate and likely within reach of a seat on the Senate Banking Committee, “regulators feel emboldened. They feel a new sense of purpose,” he says. “Banks want to do what they can to minimize complaints. They’re being a little more consumer sensitive than they were before.”

After last year’s debit card fee debacle, in which Bank of America had to back off plans to add a $5-per month fee for debit cards, banks are leery about provoking consumer ire by adding new fees, especially monthly maintenance fees that customers never had to pay before. Massive consumer backlash could prompt regulators to take a look at banks’ business practices, and no businesses want to trigger greater regulatory scrutiny.

A recent article in the Wall Street Journal noted that Bank of America, the second-biggest bank in the country, is backing off from checking account fees, saying it “has shelved plans for new fees that could have hit at least 10 million customers by the end of this year… The decision to hold off on new checking-account fees at least until late next year comes amid a sweeping review of the bank’s retail-banking business.”

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