Jersey Shore Federal Credit Union, on New Road in Northfield, advertises No Debit Card Fees Here. People are fleeing Bank of America and other big banks and opening accounts at community banks after the flak of BOA charging customers to use a debit card. Tuesday, October ,25, 2011 ( Press of Atlantic City / Danny Drake)

Danny Drake

Sheila M. Boyle of Dennis Township likes one feature of her Bank of America debit card.

Every time she makes a purchase, the bank rounds up the charge to the next dollar and deposits the difference into her savings account, Boyle said. A quarter here, 90 cents there add up over time.

But Boyle was ready to terminate her relationship with Bank of America and switch to a credit union or community bank. At issue was the $5 monthly fee Bank of America said it would start charging its debit-card users next year. Bank of America created quite a stir when it announced the fee on Sept. 30. Many people threatened to transfer their accounts to smaller banks, and there was an informal movement to declare Nov. 5 National Bank Transfer Day.

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But the bank announced last week it would scuttle plans for the monthly fee, citing “customer feedback” and a “changing competitive marketplace.” A company spokeswoman declined to say how many people had closed their accounts.

“Do you love it?” Boyle said when she heard the news. “I guess I’ll stay where I am right now, but I will be looking after the holidays.”  If Bank of America starts charging her account, she’ll take her business elsewhere, she added.

But for some customers, the announcement was too little, too late. They had already fled to community banks and credit unions.

“Everywhere I go, it seems to be the topic of conversation,” said Danny Sulpizio, senior vice president of Sewell-based Parke Bank, with branches in Northfield and Galloway Township. “I guess at some point, people ask where you draw the line.”

Parke Bank has seen an increase in the number of new accounts since Bank of America made its fee announcement, Sulpizio said.

Bank of America’s move was prompted by federal regulations that went into effect Oct. 1. They keep banks from charging merchants more than 21 cents per debit-card purchase. The previous charge was about 44 cents.

Other large banks also have said they would charge fees to use debit cards — and since reneged — but Bank of America generated the most publicity.

Kim Davidson, executive vice president of Ocean City Home Bank, said she feels some empathy for Bank of America.

“We feel bad that they’re getting the brunt of the issue, but they’re not the only ones,” Davidson said.

Many people don’t realize networks such as Visa and Master Card charge banks when a customer uses a debit card, Davidson said. The swipe fee the bank collects from the merchants offsets that cost.

“It’s not just pure income that a bank is receiving,” Davidson said.

Still, Ocean City Home Bank has seen a slight increase in the number of new accounts since the news hit, Davidson said. The bank does not charge extra to use a debit card.

“In this economy, every little bit matters,” she said. “People are going to start looking” at where they can cut expenses.

Larger banks, those with $10 billion or more in assets, are falling under tighter federal regulations, said Chick Pinto, executive vice president and chief marketing officer of Cape Bank, with 16 branches in Atlantic and Cape May counties.

“These larger banks are trying to find ways to make up for it. The smaller banks aren’t feeling the same pressure,” Pinto said. “We can pass some of these fee savings on to customers as a competitive advantage.”

Cape Bank hasn’t seen a flood of new customers as a reaction to the Bank of America announcement, Pinto said. But others capitalized on Bank of America’s planned fee to attract new business. A lit sign stating “NO debit card fee HERE” was recently seen outside the Jersey Shore Federal Credit Union in Northfield.

The credit union has been gaining members during the past month or so, and many people have specifically said they are leaving Bank of America, said business development manager Erna Laielli. The credit union has been advertising the no-fee policy, she said.

“That’s been the hot item,” Laielli said. “Everyone wants to know if there are fees with the debit card.”

But the disappearing debit-card fee can reappear in other forms. Bank of America raised the fee on its basic checking account by $3 last spring, and it is testing checking accounts with varying monthly fees in several states, not including New Jersey. JP Morgan Chase doubled the fee on its checking account earlier this year, and Wells Fargo ended the reward program attached to its debit card.

Unless the national movement to switch to community banks and credit unions picks up momentum, most people probably will stay with their current bank — until they notice new fees.

“Typically, changing banks is the last thing on people’s lists. If they haven’t seen it in black and white, it’s very unlikely they’ll jump on it just yet,” said Davidson of Ocean City Home Bank. “They’re going to open their bank statement, and if they don’t like what they see, they’re going to make a move.”

That’s exactly what John Frame of the Palermo section of Upper Township said he’ll do. So far, he has accounts and debit cards at Bank of America and TD Bank, and he’s happy with the service.

“I’m not paying for a debit card,” said Frame, a senior citizen on a fixed income. “I’ll use it now, but when they start charging me, they’re done.”

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