Bank of America's announcement that it will charge a $5 monthly fee for using a debit card at a merchant has consumers struggling to make ends meet.
The outrage has been heard at banks and credit unions in South Carolina. Tellers at ArrowPointe Federal Credit Union, First Citizens Bank, Family Trust Federal Credit Union, Provident Community Bank and South Carolina Bank & Trust say people are asking, "Do you charge for debit cards?" or "How can I move my account here?"
Even though the Bank of America fee doesn't start until 2012, some people already have moved their accounts, local bankers report.
"People are saying with this $5 fee, enough is enough," said Lud Vaughn, executive vice president and chief operating officer for Provident Community Bank.
It can become a tipping point that separates the big banks from the local community banks and credit unions.
As Vaughn said, "We now have the advantage."
The change that triggered the biggest reaction is reducing the fee merchants pay the bank every time a customer uses a debit card.
The interchange fee -- commonly called the swipe fee -- was reduced from an average of 44 cents per transaction to 21 cents for banks with more than $10 billion in assets.
There are 37 billion debit card transactions annually, according to the Nilson Report. Cutting the swipe fee will result in a loss of $6.6 billion to the big banks, estimates Javelin Strategy and Research.
Bank of America's loss is in the billions of dollars, said its chief executive officer, Brian Moynihan.
Lee Gardner, chief executive officer of Family Trust Federal Credit Union, said the loss is simple economics. Regulations have driven up expenses and taken away income. The result is that banks are looking for ways to remain profitable.
So Bank of America and SunTrust announced a $5 fee. Other big banks, such as Wells Fargo and Chase, are experimenting with a $3 fee. In addition to the debit card fees, banks are looking at other ways to raise revenue, such as increasing fees for paper statements and charging more for using ATMs outside their networks.
The result is outrage, which Gardner said is unfair. The big banks have been "demonized unjustifiably," he said.
The banks, Gardner said, are "not social agents. They are for-profit businesses."
Some fear the increased fees will hit people struggling to make ends meet the hardest. It is a fear Gardner said bankers tried to warn politicians in Washington about when new regulations were considered.
"Washington thinks they are helping them, but they are hurting them," he said.
From a financial perspective, the banks are "not targeting a person, they are targeting the bottom line," Gardner said.
The average checking account costs banks between $250 and $300 per year to maintain, according to the American Bankers Association. Interest income on small accounts offsets only a fraction of that.
"It's the thinning of accounts," Gardner said. "Which ones contribute, which ones don't."
Bank of America spokeswoman Betty Riess said the purpose of the fee is to reward customers who bring business to the bank. People with balances in other accounts, in investment accounts, or with a mortgage, likely won't be charged the $5 fee, she said.
Meanwhile, 32 credit unions from across South Carolina have signed a pledge saying they will keep debit cards free "as long as market conditions allow," according to a release from the non-profit S.C. Credit Union Movement.
It is a trend among credit unions and community banks nationwide.
"Our message is we do not charge, and there are no short-term plans to do so," said Gary Hood, an executive vice president with South Carolina Bank & Trust in Rock Hill.
"But I can't comment on that never changing."
Community bankers say they can offer free services because their economic model is different from the large banks. They say they are more efficient, and their stockholders are usually people who bank with them, said Vaughn.
Gardner said credit unions can offer free services because they are not for-profit businesses, and credit unions don't pay federal taxes. The money a credit union earns is returned through its members in free or lower-cost services, Gardner said.
Community banks and credit unions also have not seen their swipe fees cut. They can still charge merchants the 42-cent average charge.