Fed up with rising fees and nonstop product pitches, Patrick Lujan closed his accounts with JPMorgan Chase and Bank of America this summer.
The last straw for the Lakewood computer consultant was a $10 fee Chase added to transfer money online between his accounts.
“It was a personal, economic and ethical decision,” Lujan said. “I said, ‘That is it. I am done.’ “
He switched his business to Mutual of Omaha Bank and the Credit Union of Denver, where, he said, fees are minimal and service is more personal.
Banks say they are increasing fees in response to a new regulation that caps what they can charge on debit-card transactions at 21 cents, down from 44 cents.
With interest rates low and credit demand
soft, they also are struggling to make profits on the spread between the rates on deposits and loans.
“The national figure is that the cap knocked off $14 billion of income and a conservative estimate for Colorado banks is $200 million,” said Don Childears, president and chief executive of the Colorado Bankers Association.
Bankers warned that more fees would result if the government started tinkering with their profit model and that is exactly what is happening, Childears said.
Banks are experimenting with different kinds of fees and watching one another closely to see how consumers respond, he said.
Bank of America created an uproar Sept. 29 when it said it would start charging customers $5 a month to use its debit cards.
Rival Citibank called the monthly debit-card fees an irritation to customers.
But then Wednesday, it announced a $20-a-month charge for midlevel checking account customers who don’t maintain a minimum balance of $15,000.
But higher fees upset consumers like Lujan. And banks don’t appreciate how such moves work against their own long-term interests, argues customer service advocate John Tschohl, president of the Service Quality Institute.
He said banks are going down the path of “Netflix,” which sharply raised subscription prices this summer, only to lose 1 million customers and 60 percent of its stock market value.
“They think people will do whatever they want,” he said of the banks that are raising fees. “It is the arrogance of power. These guys are acting like a monopoly, and they don’t listen to their customers.”
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