After the news broke that Bank of America and other big banks were planning on charging monthly fees for customers to use their debit cards, a national public outcry ensued. Petitions against the debit card fee were signed by hundreds of thousands of people online, The Guardian reports. BofA did back down from implementing the fee, which is great news for loyal Bank of America customers. Even though many customers are still upset over the bank’s previous intentions, how many of those people will actually switch banks? The result may surprise you. According to a study of BBC Watchdog viewers, people in Briton are more likely to get divorced than switch banks, even when they are highly dissatisfied with their bank’s service.

People in the British study claim they view the process of switching banks to be “a pointless and time consuming exercise,” which clearly expresses exasperation with the banking industry as a whole. While many Americans likely echo those sentiments, others are attempting to rally the masses in order to get people to switch to credit unions with more (perceived) reasonable terms, even going as far as to promote a national “Bank Transfer Day,” The Huffington Post reports. “Bank Transfer Day,” designated as November 5, 2011, encourages everyone to go out and switch their big-bank accounts to a local credit union account. While that may be good advice for some people, that advice won’t benefit everyone.

Here’s why: Just like the same prescription medication and clothing wardrobe won’t work for everyone, the same bank (or type of bank) won’t benefit everyone either. Credit unions are a wonderful type of financial institution, and they (on average) have lower interest rates on loans and higher rates on deposit accounts. But credit unions aren’t a panacea; they aren’t the remedy for all of the banking industry woes and they aren’t the best option for every consumer. Many people (especially those who travel a lot) may be better off with a big-name national bank like Bank of America so that they can be assured no matter where they go in the country, they can find a branch (and an ATM) if needed. Other people may find that a local credit union works great for them, depending upon their banking and lifestyle habits.

People shouldn’t stay with their bank no matter what (especially if they would divorce their bank had it been a spouse), nor should they blindly deposit all of their money in a local credit union just because it’s not a “big bank.” While it is important to be cautious about rising bank fees, it’s also important to consider your individual needs and choose a bank that benefits you best.

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The WSJ is reporting today that Bank of America has pulled the plug on its planned $5 monthly debit card fee. It's no real surprise considering the negative press and the online uproar. Online sites, social networks, and message forums have been full of customer complaints about the fee as well as customer threats to close accounts and leave the bank because of it. This, and the fact that competitors such as Chase and Citibank decided not to levy a fee, forced Bank of America's hand.

I suspect the bank made the decision based on two factors:

• Being the lone major bank with the fee would put it at a competitive disadvantage in claiming its fair share of checking accounts. Not only did the other major banks back away from a fee, but startups such as PerkStreet Financial (a financial company that offers a debit card with no fee and 2% cash back) and smaller banks and credit unions were capitalizing on the news.
• The negative public sentiment was more than the battered bank wanted to deal with. Since the financial crisis and the purchase of Countrywide, Bank of America has been contending with a string of bad news related to losses, government assistance, subprime loans, mortgage modifications, and more.

The fee came in response to the Durbin Amedment, which lowered the amount banks could charge merchants when a customer uses a debit card. The Amendment is estimated to cost banks billions of dollars per year in lost revenue.

As banks try and recoup this revenue, look for more account and service fees.

For those interested in the dynamics behind today's low savings and CD rate environment, the NY Times published a good article by ERIC DASH and NELSON D. SCHWARTZ over the weekend examining the impact of a glut of cash on bank rates. Banks are swimming in cash. From the article:

"Droves of consumers and businesses unnerved by the lurching markets have been taking their money out of risky investments and socking it away in bank accounts, where it does little to stimulate the economy.

Though financial institutions are not yet turning away customers at the door, they are trying to discourage some depositors from parking that cash with them. With fewer attractive lending and investment options for that money, it is harder for the banks to turn it around for a healthy profit.

Others are finding more subtle ways to stem the flow. Besides paying next to nothing on consumer checking accounts and certificates of deposit, some giants — like JPMorgan Chase, U.S. Bancorp and Wells Fargo — are passing along part of the cost of federal deposit insurance to some of their small-business customers."

The article interviewed Don Sturm, the owner of two banks based inn Colorado. Sturm said he has record deposits and nothing to do with the money. He is lending less to businesses and has scaled back loans to real estate and ski resorts. The article also discussed how Hyde Park Savings Bank located outside of Boston has lowered rates in an attempt to shed depositors.

Out of curiosity, I decided to check out both banks.

• American National Bank's savings and CD rates are below the national average. For instance, the national average on a 12-month CD is 0.60% while American National is paying 0.20%. It's 3-year CD is paying .40% versus the national average of 1.14%. From a financial perspective, the bank has elected to shrink, with its assets dropping from $2 billion in 2007 to $1.7 billion in 2011. Overall, with a Texas Ratio of 17.36%, the bank looks to be in good financial shape so the reduction in size appears voluntary. The decision to shrink in size is most likely due to its particular business or local economic conditions.
• Hyde Park Savings Bank is more average. It's CD rates are on par with the national averages - 12 month CD of .65% versus national average of .60%. But like American National, Hyde Park shows a decline in assets and deposits over the past five years. The bank is also shrinking itself.

Management of these banks has decided to shrink in response to tough economic and lending conditions. But that's not true of all banks. Some banks are expanding and growing and have a greater need for deposit dollars. These are the banks you want to find if you are looking for the best rate. For example, in the Hyde Park area, there are several banks offering more competitive rates. Peoples Federal Savings Bank pays 0.80% for a 12 month CD, while Oneunited Bank pays 0.75%. It's not much higher but it's still more for the same exact product.

Every week, I feature banks that are cash hungry and willing to put a little extra yield behind their offer. They exist and should be recognized. And, as I discovered, banks paying higher rates are often more financially stable than their lower rate peers.

In addition, not all regions of the country are created equal. An analysis I did shows that bank demand for cash varies by region. Rates in some parts of the country can be more than double rates in other regions. In general, it seems to correlate with the regional economy.

So yes, banks are awash in cash and lowering rates. The news is grim. But there are two bright spots.

1. You can quickly shop around and find banks looking for your cash and willing to pay you more.

2. Eventually overall rates will go up. Nothing stays high or low forever.