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September 21, 2011
In order to avoid significant revenue loss in light of the Federal Reserve’s new debit swipe fee limits, Bank of America is encouraging greater credit card usage among its existing client base.
“The bank is luring its brokerage clients into signing up for credit cards and giving up their deferred-debit cards by allowing them to retain their existing reward points, and also giving them additional points for making the switch,” reports Forbes. “The scheme is targeted toward brokerage clients holding a Visa signature debit card linked to their brokerage accounts. These debit cards will not earn any rewards after November 15 which may tempt these clients to make the switch.”
Many of BoA’s industry counterparts have begun assessing additional fees for debit usage. Wells Fargo starting in October will begin charging $3 each month to shoppers using debit cards. JPMorgan Chase, Regions Bank and SunTrust Bank have also added fees for debit card usage, according to the Los Angeles Times.
“JP Morgan Chase is already charging a $3 fee in some places, such as Wisconsin,” reports the Los Angeles Times. “Regions Bank too has already begun charging a $4 monthly debit card fee, as well as Sun Trust Bank. which now charges a $5 monthly debit card fee.”
Credit card interchange rates are not limited. When a consumer pays via credit, nearly 2 percent of the purchase amount goes to the bank, according to Forbes.
“Our analysis of Bank of America shows that the card business contributes nearly a sixth of the bank’s estimated $11 value,” Forbes reports. “It therefore comes as no surprise that the bank will try anything it can to get customers to move from debit to credit cards in order to minimize the loss of revenue.”
Click here to read the full Forbes analysis.