Bank of America Corp. has eliminated its planned $5 debit-card fee, backing down after more than a month of harsh criticism and mounting pressure as top competitors declined to follow suit with similar charges.

Analysts say it was a necessary move that will chip away at some of the resentment against the nation's second-largest bank by assets. But they say the about-face also highlights the Charlotte bank's decreasing ability to lead other big banks - and raises more questions about chief executive Brian Moynihan's credibility as the bank faces challenges on multiple fronts.

"It strikes me as another black eye to Moynihan and everyone involved in the decision to press forward with what became another on a string of public relations embarrassments," said Gary Townsend of Hill-Townsend Capital LLC, a Maryland firm that invests in banks. "We knew almost immediately that other banks were not going to follow ... so what it tells me is that Bank of America is not in a position to lead, and it didn't lead here."

The bank first announced the fee Sept. 29 in response to regulations that cap the "swipe fees" merchants pay banks when shoppers use their debit cards. The charge would have been phased in starting next year.

The swipe-fee caps, part of the Dodd-Frank financial reform law, could cost affected banks a combined $6.6 billion annually, financial services research firm Javelin Strategy & Research estimated. Bank of America has said it stands to lose $3 billion a year from that change and from its move last year to eliminate overdraft fees on most debit transactions.

Other lenders, including Wells Fargo & Co. and SunTrust Banks Inc., were testing or had implemented similar debit-card fees. But Bank of America caught the brunt of the criticism, with customers threatening to switch banks and politicians from local legislators to President Barack Obama chiding the bank's leaders for squeezing customers in an uncertain economy.

Community banks and credit unions began wooing frustrated customers, with some reporting a windfall of new checking-account customers.

And big-bank competitors began to pull back: JPMorgan Chase & Co. and Wells Fargo, for instance, decided last week to halt their debit-fee tests, and SunTrust announced it would eliminate its $5 monthly fee and reimburse customers who had already paid.

'Listened to our customers'

Moynihan has defended Bank of America's fee to analysts and the public, noting that customers with some types of accounts or mortgages would be exempt - which would encourage people to do more business with the bank. During a meeting with employees last month, he said he was "incensed" by recent attacks on the bank, Bloomberg reported.

By late last week, sources familiar with the situation were saying the bank would likely scale back its original plan, making it easier for more customers to avoid the fee. Tuesday morning, Bank of America announced it would scrap the charges entirely.

"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," co-chief operating officer David Darnell said in a statement. "Our customers' voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."

Some customers celebrated the move.

Marie Wilkinson of south Charlotte said she had planned to switch banks after the fee was implemented. But she said Tuesday she would give Bank of America another chance.

"Since BofA has decided, due to such a public outcry, to cancel the plan, I will probably stay with them until they undoubtedly try to come up with yet another fee," she said.

Michael Robinson of Levick Strategic Communications, a Washington, D.C., public relations firm specializing in crisis management, said reversing the debit fee was a good first step in rebuilding public confidence.

Now, the bank needs to slowly win back customers' trust by reminding people of the bank's importance to the economy and ramping up customer service, he said.

"I think they have to get back into the business of relating to their customers," Robinson said. "You occasionally get a mulligan, but you've got to ask for it. They have to say, we made a mistake, but we're making it right."

Is BofA losing influence?

Other analysts said the bank hadn't likely experienced a significant loss of customers since it announced the fee - but that the situation highlights a deeper problem: Bank of America is losing power and influence among its peers.

The bank, which posted a nearly $6 billion profit in the third quarter, has under-performed competitors such as JPMorgan and Wells Fargo this year as it struggles through continued mortgage woes.

Its stock price has taken a beating, falling by more than 50 percent this year and ranking as the worst performer in the Dow Jones Industrial Average for two straight quarters.

And last quarter, as it sold off assets to help boost efficiency and profitability, Bank of America lost its billing as the nation's No. 1 bank by assets to New York-based JPMorgan.

Analyst Jefferson Harralson of Keefe, Bruyette & Woods Inc. said the bank was likely caught off-guard when competitors backed away from debit fees.

"BofA believed it was charging a fair price for its services, but I think that the size of the consumer backlash in combination with the lack of competitor support made it too much of a competitive disadvantage," he said.

Harralson said Bank of America's decision to implement a fee in the first place showed a "sense of urgency" to get back to an acceptable level of profitability - but given the backlash, banks won't likely be able to accomplish that through new fees going forward.

"The banks and Bank of America are going to have to just simply accept lower profitability until the economy comes back," he said. "This signifies it's going to take more time."

Townsend, the Maryland investor, said Bank of America would have fared better had it avoided the fee altogether.

"The fact that they chose to try to put it in place and then to find that they weren't the market leader, it underscores again the problem that Bank of America has today, where its reputation has been sullied by poor financial performance and several consecutive missteps as Brian Moynihan's tenure has progressed," he said.

Townsend doesn't expect new fees on consumers, but said a possible alternative is more fees for business customers. One thing that's clear: Until Bank of America regains strength, it won't be an industry trend-setter, he said.

"That's not to say it won't ever be a leader again - it is the second-largest financial institution out there - but presently, it's in a weaker position than competitors," he said. "And when you look at the leadership in Bank of America and compare it to JPMorgan or U.S. Bancorp, one would have to say there's a leadership deficit, as well."

Bank of America shares closed at $6.40 Tuesday, down about 6 percent on a bad day for financial stocks.