Consumers should bail on bailed-out B of A

How many people do you know who say they’re not good at math? Probably a lot. But even all those folks who rolled their eyes in school over solving word problems can likely grasp a simple 3-minus-2-equals-1 computation.

What if a corporation, say Bank of America, has to change its business practices because the federal government — for once — actually passes a financial reform law aimed at protecting consumers instead of augmenting corporate wealth?

In this case, the law says these megabanks — you know, the ones that were bailed out (B of A got $45 billion) after they caused the economic crisis that’s still kneecapping so many families today — can charge no more than 24 cents to a merchant each time a customer uses a debit card to pay for a purchase.

Before, banks were charging an average of 44 cents for each transaction, but as a Los Angeles Times financial columnist notes, the lower fee is what the Federal Reserve determined is a “reasonable and proportional” charge that reflects “how much it actually costs banks to process a debit card transaction.”

The true cost may be a lot less, perhaps only a few pennies per transaction. So the banks will still be making a profit.

The banks made $19 billion from these processing fees in 2009, according to industry tracking reports, and B of A says the new cap on fees will cost it $2 billion in annual revenue.

But charging B of A account holders $5 a month (which math whizzes know adds up to $60 a year) could easily total $3 billion a year, the LA Times article points out.

So our equation is this: $3 billion in debit card fees from sticking it to B of A customers, minus $2 billion taken away from B of A by those meddling federal regulators, equals a net increase of $1 billion in revenue for B of A.

The only downside is the public relations mess when B of A has to change from raking in hidden fees to being up front about gouging its customers to the tune of $60 a year.

B of A customers en masse ought to change that equation by taking their business elsewhere, to a credit union or local bank.

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