Chase will drop fee on debit cards after test

NEW YORK – Chase is joining the list of banks that won’t be charging customers to use their debit cards, as the backlash over Bank of America’s planned $5 monthly fee continues.

The retail banking arm of JPMorgan Chase & Co. will stop charging $3-per-month fees for using debit cards when its current pilot in Wisconsin and Georgia is completed in November, a source with knowledge of the bank’s plans told the Associated Press.

The test program involves an “a-la-carte” checking account that allows customers to choose what banking products they want, said the individual, who asked not to be identified because the bank has not officially announced the program will not go forward.

Chase, which operates in 23 states, began its test in February. It’s not alone. Wells Fargo & Co. began a similar pilot in five states on Oct. 14, testing a flat $3 fee for using debit for purchases.

Banks are justifying the fees by stating that they need to recoup revenue lost to new regulations that limit the fees they can collect from retailers for handling debit card transactions. But the new fees sparked a huge backlash.

Signs like, “I bailed out the banks and all I got was a $5 debit card fee” have been spotted at the Occupy Wall Street protest in New York and its sibling protests around the country. The author of the regulations, Sen. Richard Durbin, D.-Ill., called the fee an “outrage” on the floor of the Senate.

“It is hard to believe that a bank would impose such a fee on loyal customers who simply are trying to access their own money on deposit,” he said. “Especially when Bank of America for years has been encouraging their customers to use debit cards as much as possible.”

Durbin encouraged customers of banks that charge fees to “vote with their feet,” but consumers were already ahead of him. Credit unions and community banks nationwide are reporting huge spikes in new accounts as consumers seek no-fee options.