On 10/2/2011 2:26 PM, HeyBub wrote:

BoA recently reported a profit decline of 37%. Their earnings for the 1st
quarter were $2 billion (down fro $3.2 billion in the same quarter last
year). A reduction of $2 billion in fees would wipe out the profit for an
entire quarter. No business can take that kind of hit.

It's a mistake for BOA to believe that the $5 per month fee will result
in the restoration of that $2 billion in fees. On the surface it makes
sense to stop hiding fees in merchant transaction costs. In reality most
consumers will either switch to cash, credit cards, or checks, or move
to a financial institution that does not charge a monthly fee. It's easy
enough to withdraw cash from an ATM and pay in cash, debit cards simply
eliminated that extra step. Most people that use debit cards probably
have credit cards too, so they'll just switch to them.

Credit cards used to have annual fees but now only a handful of cards,
generally the ones with extremely good rewards programs, still charge a
fee. Once one credit card issuer abandoned annual fees everyone had to
follow suit.

Annual fees to do business with a company are very hard to justify.
Costco is successful with this because of the overwhelming financial
benefits of shopping at Costco versus at a non-membership store--the $50
annual fee is lost in the noise of the total annual savings.