NEW YORK (MainStreet) – As Bank of America prepares to implement a $5 monthly debit card fee and Wells Fargo flirts with doing the same, the idea of a bank actually paying its customers to use a debit card seems almost laughable. But that’s exactly what’s happening at the Randolph Brooks Federal Credit Union in Texas.
The credit union ordinarily pays free checking account customers 10 cents for every purchase they make with their Freedom Check Card. But last week the credit union upped the ante by bumping that reward up to 15 cents. The increase will last through Dec. 31.
While the promotion may seem perfectly timed to take advantage of the publicity surrounding Bank of America’s fee increase, Sonya McDonald, RBFC’s senior vice president of marketing, says that plans had already been in the works prior to Bank of America’s announcement.
“We’d been planning it since August, and we fortuitously made our announcement right after Bank of America made theirs,” she tells MainStreet. “With the current state of the economy, members need to worry about their own business, not fitting extra fees into their budget.”
The promotion comes as many Bank of America customers are threatening to leave the bank. In an informal poll conducted by TheStreet, 83% of readers said they planned to leave the bank over the new fees. Experts say that inertia is likely to keep many of those disgruntled customers from following through on their promise, but those who do decide to defect will likely take a hard look at small banks and credit unions. The Durbin Amendment, which capped debit card swipe fees and prompted the barrage of checking account fees from the major banks, does not apply to institutions with total assets of less than $10 billion. That means that smaller institutions are more likely to continue offering free checking, as well as perks like RBFC’s debit card bonus.
McDonald says that the credit union has indeed seen a significant uptick in new membership in the week since Bank of America’s announcement.
“In the past week we’ve seen record numbers of people coming through the door,” she says. “On a typical day we’ll get 150 new members, but in the last week we’ve seen around 265 new members a day, and a third of those are coming over from Bank of America.”
Membership to the credit union is primarily limited to residents in the Austin and San Antonio areas. And keep in mind that this deal isn’t going to make you rich: Even if you use your debit card once a day, you’re still taking in less than $5 a month in bonuses. By contrast, getting a good reward credit card that gives you 1%-2% cash back is likely to put more money in your pocket.
Still, the promotion is a good reminder that smaller institutions, and credit unions in particular, are likely to be safe havens for bank customers fleeing the never-ending avalanche of new bank fees.