Bank of America

SquadronROE

So we've seen some backlash against Bank of America's plan to charge for debit cards.. and they're also down to around $5/share. Who thinks they're going to come back from this? Just a few months ago they were at around $10/share.

WindUpBird

They're boned. They're trying to be the bank of the developed world, where most people's plastic debits outweigh their cash pays 10:1. Charging for debits was suicidal; no idea what the fuck they were thinking.

Apreche

There's no reason to ever use a debit card. A credit card is superior (for the consumer) in every way. That assumes, of course, you aren't a dumbass and you never carry a balance. I haven't ever carried a balance in almost a decade of credit card usage.

WindUpBird

There's no reason to ever use a debit card. A credit card is superior (for the consumer) in every way. That assumes, of course, you aren't a dumbass and you never carry a balance. I haven't ever carried a balance in almost a decade of credit card usage.

I'll correct myself here: If you're a student, they've fucked themselves completely.

I don't have a credit card. C'est la vie.

SquadronROE

I think I know what they were thinking:

When debit cards first came out, they were a very convenient alternative to cash and credit card (debt) transactions, however they were rare. Thus, Bank of America (and others) felt justified in charging fees for merchants to allow this technology to be used. The fees fed into profit, as well as paying for the infrastructure necessary to support these transactions. In turn, the merchants that jumped on this and ate the increased cost had a competitive advantage over those who didn't.

Eventually, debit card transactions became incredibly commonplace, however merchants still had to pay fees to receive them without retaining any true competitive advantage. That was simply the cost of business (in BoA's eyes) and they tolerated this.

The economy tanked, and many merchants felt the need to tighten up their spending. This caused them to analyze the fees they paid to allow debit card transactions. Thus, they noticed that this was unfairly being charged and they started lobbying for a change.

Government gets involved by regulating the maximum amount a bank can charge for each transaction. While this is being debated, Bank of America sees massive profit losses from other sectors of its business due to the tanked economy and loss of a variety of investments. They see their profits drop alongside their shareholders' confidence, resulting in a depressed share price.

Government finally sets the amount that banks can charge per debit fee, thus resulting in yet another lost amount of revenue for Bank of America. The powers that be at BoA (maybe the board of directors or President?) decide that the consumer market will have to make up for the lost revenue so that they can continue to make debit card transactions profitable.

Thus, instead of getting creative and trying to actually innovate and find new revenue streams, they try to milk the old cow once again. Obviously this is all simply conjecture and my opinion, as I don't work in finance and really have no true background in it... but that makes sense to me.

Personally I think they're boned.

SquadronROE

There's no reason to ever use a debit card. A credit card is superior (for the consumer) in every way. That assumes, of course, you aren't a dumbass and you never carry a balance. I haven't ever carried a balance in almost a decade of credit card usage.

Yeah, I'm starting to rely on my credit card for most transactions now, rather than my debit card. I've got one of those points cards, too, so all of my transactions contribute to points I can use for airline tickets or whatever.

Rochelle

There's no reason to ever use a debit card.

Some institutions don't take credit cards. No idea why, but they don't. One place that I frequent is a very cheap grocery store that is near me. It won't stop me from shopping there because I save a lot of money instead of going to another grocery store like Safeway, where they charge way too much.

I haven't ever carried a balance in almost a decade of credit card usage.

Good for you, Scott. Give yourself a pat on the back. Most people cannot do this.

Apreche

I don't have a credit card. C'est la vie.

Just get one. It's easy. You fill out a form. They mail you one. Pick one that has rewards you will use. Amazon Visa is my card of choice now.

SquadronROE

Amazon Visa

What's your honest opinion of this card? Currently I have a BoA mastercard that gives me points, which I understand can be a rarity nowadays (for a card with no monthly fees, is visa/mastercard), but I've been curious about switching it up to an Amazon mastercard or seeing if Newegg offers anything.

Rochelle

Just get one. It's easy. You fill out a form.

It's a bit more difficult for young college kids to get credit cards these days compared to when you were able to get them Scott.

trogdor9

If you have a BoA CampusEdge Checking account (only available if you can prove that you're a student), the $5 debit card charge does not apply to you.

Erwin

I use a Sharechek card, and it is not from Bank of America. I also like to only keep $100 on my checking account. Most of my monies go to my savings :P
I only use a credit card for gas and to buy gifts.

dsf

BoA aggressively pursues the subprime market and has the collection agencies on speed dial. These people don't know how to run a legit bank.

Rym

Most people cannot do this.

On this point I disagree.

If a person has no credit card, they can't spend additional money beyond what they have.
If a person has a credit card, they can spend additional money beyond what they have, but are not obligated to.

The person without the credit card couldn't spend the money anyway, so the same person with a credit card could decide not to spend the additional money and be in the same boat they would have been in had they never had a credit card in the first place: no worse off.

What you're saying is that most people do not have the discipline to not spend money they don't have if they are able to. It's like saying that if I give someone a hammer, they'll break all their furniture, so I shouldn't let them have this tool, even though they can choose not to break all of their furniture and still have all the benefits of the hammer.

Cremlian

These people don't know how to run a legit bank.

Not true, they know how to run it into the ground :-p

Rochelle

What you're saying is that most people do not have the discipline to not spend money they don't have if they are able to.

Yes. I meant this. I lack in that discipline as well, but it's honestly not a major problem for me. I'll pay off my credit cards within a few months, so I'm not hurting.

Dragonmaster Lou

What you're saying is that most people do not have the discipline to not spend money they don't have if they are able to.

Yes. I meant this. I lack in that discipline as well, but it's honestly not a major problem for me. I'll pay off my credit cards within a few months, so I'm not hurting.

There's also the odd case of sudden expenses sneaking up on you. I almost never carry a balance on my credit cards, but on occasion (like when I had a $5000 plumbing bill a couple years back), I sometimes do due to extenuating circumstances. Of course, I then try to pay off said balance as quickly as possible by paying well above the minimums.

Rochelle

There's also the odd case of sudden expenses sneaking up on you. I almost never carry a balance on my credit cards, but on occasion (like when I had a $5000 plumbing bill a couple years back), I sometimes do due to extenuating circumstances. Of course, I then try to pay off said balance as quickly as possible by paying well above the minimums.

Ayup. As long as you don't make any late payments or just minimum payments, and try to pay off your balances ASAP, you're fine.

You're not what the lenders considered "dead-beats", where they don't make the most money off of you from finance charges and fees.

Rym

There's also the odd case of sudden expenses sneaking up on you. I almost never carry a balance on my credit cards, but on occasion (like when I had a $5000 plumbing bill a couple years back), I sometimes do due to extenuating circumstances. Of course, I then try to pay off said balance as quickly as possible by paying well above the minimums.

Which is fine. I carry balances every now and then.

But if I didn't have a credit card at all, I wouldn't even have the choice of carrying a balance: that sudden expense would be a disaster.

Cremlian

But if I didn't have a credit card at all, I wouldn't even have the choice of carrying a balance: that sudden expense would be a disaster.

You would have to get a loan from a bank. A bit slower but still possible :-p

Apreche

It's a bit more difficult for young college kids to get credit cards these days compared to when you were able to get them Scott.

You can still get a credit card with a very low limit. Which is probably good.

What's your honest opinion of this card? Currently I have a BoA mastercard that gives me points, which I understand can be a rarity nowadays (for a card with no monthly fees, is visa/mastercard), but I've been curious about switching it up to an Amazon mastercard or seeing if Newegg offers anything.

It's good for me because I buy a lot of shit on Amazon. Get a card that goes along with whatever you do. Do you fly a lot? Get a Jet Blue card.

Rochelle

You can still get a credit card with a very low limit. Which is probably good.

Either that or a secured credit card. It will take a lot of discipline to save a few hundred to get it started. There are still more difficulties now vs how it was in the past.

Gundampilotspaz

I've always paid for debit card. Not a feel a bit ripped off. The only reason I keep a physical bank checking account is because ING hasn't figured out how to accept cash in any other way. I'll probably go in and step down the account, now that this has forced me to think about it. I just need to memorize the randomly generated PIN that ING forces upon you. >.>

HMTKSteve

Didn't some law just pass that involved changing the fee schedule for merchants who take debit cards? I know I keep hearing a commercial on the radio targeted towards businesses who take the cards that talks about a fee change.

Is that why BoA is doing this? Are they trying to make up for lost revenue due to a law change?

link
lawsuit?(old)

The Fed in December proposed capping the fees at about 12 cents per transaction -- a 75 percent cut. The banking industry estimates this would cost them $12 billion annually.

The brief filed by the banking groups argues that the Fed proposal goes too far.

"The Board's erroneous interpretation of the Durbin amendment threatens to wreak havoc on this vital component of our nation's economy and to cause substantial structural disruptions to the financial-services industry," the groups wrote in their brief.

In its lawsuit against the Fed, TCF argued that the fee crackdown required by the law is unconstitutional because it applies only to about 1 percent of U.S. banks -- those with assets of $10 billion or more -- and because it will set a fee that takes into account only a narrow aspect of a service's cost.

GreatTeacherMacRoss

Credit cards are also superior in that they usually offer some kid of points or rewards for using the card. HSBC also does a nice yearly breakdown of what you spent your money on and how much you spent that year.
BoA is obviously doing a cash grab, and doing so in a stupid manner. Other banks were very quick to say they will never charge for debit cards.

Cremlian

BoA is obviously doing a cash grab, and doing so in a stupid manner. Other banks were very quick to say they will never charge for debit cards.

Which is good because usually they all follow suit and gets the monies.

theknoxinator

With the exception of Costco (cause they're dumb and don't allow credit cards), I don't use my debit card for anything besides withdrawing money from an ATM. Using a credit card for all purchases just makes sense, especially since I've had my card info stolen from a restaurant once already. Much easier to close with no penalties.

Most of my friends use a debit card to pay for everything and I just shake my head. Of course they are also always close to being broke, so they're not exactly financially responsible.

TheWhaleShark

HSBC also does a nice yearly breakdown of what you spent your money on and how much you spent that year.

Discover does the same thing. It's pretty nice. That and the periodic 5% cashback on some purchases. It's more effective than a savings account by miles, especially if you use the card to pay for everything.

Rochelle

With the exception of Costco

Yeah, I forgot about them. They only credit card they allow is American Express, where they also have people trying to peddle you to apply for one whenever you are there.

Dragonmaster Lou

HSBC also does a nice yearly breakdown of what you spent your money on and how much you spent that year.

Discover does the same thing. It's pretty nice. That and the periodic 5% cashback on some purchases. It's more effective than a savings account by miles, especially if you use the card to pay for everything.

Yep, I'm a fan of Discover for those reasons. Well, that and they happen to be customers of software that I've worked on at previous jobs (no, I didn't put any secret back doors in it to make my balances disappear).

FarliamentPunkadelic

Just closed our BOA accounts. Not because of any of the debit card flak, but because apparently there are no BOA's anywhere near Lafayette.