Bank of America’s $5 Debit Fee Led to More Account Closings, CEO Says

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A lot of people got really bent out of shape when Bank of America announced last fall that it would start charging a $5 monthly debit card fee. Online petitions were launched as the blogosphere and social media sites like Twitter overflowed with messages denouncing banks in general and Bank of America in particular. 

A lot of people vowed to never to do business with Bank of America again and said they’d switch banks. BofA eventually backed down on the debit fee after about a month of this, but some people speculated that the damage may have already been done. As it turns out, they were right. Bank of America’s CEO said in a conference call last week that the number of people closing accounts in the fourth quarter of last year jumped by 20% over 2010.

(MORE: Get Ready for Bank-Fee Whack-a-Mole)

All of the big banks announced their earnings last week, and Bank of America quantified for the first time just how much its customer base was eroded by the widely hated $5 fee. “We saw an elevated level of account closings in the quarter,” CEO Brian Moynihan said on an earnings conference call, according to the Daily Caller. Moynihan added that the number of account closures in the fourth quarter was still lower than it was during that same period in 2009, but also said these new numbers likely reflect consumers’ ire over its $5 debit card fee.

“Yes, we had some impact from the $5 debit fee. That’s why we made a decision to reverse it,” Moynihan told call participants.

(MORE: Bank of America Backlash: Consumers React to Debit Card Fee)

Early on after October 5, a day labeled Bank Transfer Day by online protesters, credit unions said they’d gained 650,000 new members as a result of consumer outrage over big bank practices. As it turned out, that number was significantly exaggerated, but BofA’s acknowledgement makes it clear that consumers did vote with their feet when it came to the $5 fee.