Banks Charging $5 Monthly Debit Card Fee

[comedyfreak]

More bad news for bank customers: Debit card fees
Debit card fees just the latest unwelcome change for checking account customers


FILE - In this July 17, 2009 file photo, a customer uses a Bank of America ATM in Charlotte, N.C. Bank of America plans to start charging customers a $5 monthly debit card fee. The fee will be rolled out starting early in 2012. (AP Photo/Chuck Burton, file)


NEW YORK (AP) -- Bank of America will start charging debit-card users $5 a month to pay for purchases. The move comes as the cards increasingly replace cash and as banks look for ways to offset the loss of revenue from a new rule that will limit how much they can collect from merchants.

Paying to use a debit card was unheard of before this year and is still a novel concept for many consumers. But several banks have recently introduced or started testing debit card fees. That's in addition to the spate of other unwelcome changes checking account customers have seen in the past year. Bank of America will begin charging the fee early next year.

Bank of America's announcement carries added weight because it is the largest U.S. bank by deposits.

The fee will apply to basic accounts, which are marketed toward those with modest balances, and will be in addition to any existing monthly service fees. For example, one such account charges a $12 monthly fee unless customers meet certain conditions, such as maintaining a minimum average balance of $1,500.

Customers will only be charged the fee if they use their debit cards for purchases in any given month, said Anne Pace, a Bank of America spokeswoman. Those who only use their cards at ATMs won't have to pay.

The debit card fee is just the latest twist in the rapidly evolving market for checking accounts.

A study by Bankrate.com this week found that just 45 percent of checking accounts are now free with no strings attached, down from 65 percent last year and 76 percent in 2009. Customers can still get free checking in most cases, but only if they meet certain conditions, such as setting up direct deposit.

The study also found that the total average cost for using an ATM rose to $3.81, from $3.74, the year before. The average overdraft fee inched up to $30.83, from $30.47

The changes come ahead of a regulation that goes into effect next month.

Starting Oct. 1, the regulation will cap the fees that banks can collect from merchants whenever customers swipe their debit cards. Those fees generated $19 billion in revenue for banks in 2009, according to the Nilson Report, which tracks the payments industry.

There is no similar cap on the merchant fees that banks can collect when customers use their credit cards, however. That means many banks are increasingly encouraging customers to reach for their credit cards, in hopes of reversing a trend toward debit card usage in the past several years.

An increasing reliance on credit cards would be particularly beneficial for big institutions like Bank of America, which have large credit card portfolios, notes Bart Narter, a banking analyst with Celent, a consulting firm.

"It's become a more profitable business, at least in relation to debit cards," Narter said.

This summer, an Associated Press-GfK poll found that two-thirds of consumers use debit cards more frequently than credit cards. But when asked how they would react if they were charged a $3 monthly debit card fee, 61 percent said they'd find another way to pay.

With a $5 fee, 66 percent said they would change their payment method.

Several banks are nevertheless moving ahead with debit card fees.

SunTrust, a regional bank based in Atlanta, began charging a $5 debit card fee on its basic checking accounts this summer. Regions Financial, which is based in Birmingham, Ala., plans to start charging a $4 fee next month.

Chase and Wells Fargo are also testing $3 monthly debit card fees in select markets. Neither bank has said when it will make a final decision on whether to roll out the fee more broadly.

The growing prevalence of the debit card fee is alarming for Josh Wood, a 32-year-old financial adviser in Amarillo, Texas.

Wood relies entirely on debit cards to avoid interest charges on a credit card. If his bank, Wells Fargo, began charging a debit card fee, he said he would take his business to a credit union.

If a debit fee became so prevalent that it was unavoidable, Wood said he's not sure how he'd react.

"I might use all cash. Or go back to writing checks," he said.

Bank of America's debit card fee will be rolled out in stages starting with select states in early 2012. The company would not say which states would be affected first.
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Time to switch and use Credit Unions people we can show those morons the people will rebel!!! I already use a credit union and won't go back.

[Brad Russ]

This is absolutely ridiculous. I'm totally convinced that all this kind of crap is done purposely. That's probably one of the most obvious things Iv'e ever witnessed. I'm convinced that every business, political figure, Hospitals, and celebrity wants people to be poor. Not a doubt in my mind.

[comedyfreak]

They're always sticking it to the little guy, you can't ever break even.

[catlover79]

I heard that on the news last night - disgusting.

[robyrob]

when they first introduced debit cards, I was able to get a special account where they were trying to promote their use and the bank actually paid me every time I used the debit card as long as I maintained a certain balance - I kept that same account for over 15 years and got into arguments with the branch manager because I wouldn't change my account type and didn't want to give up on the $0.25 I got every time I used the card.

[tiredmike59]

I never used any type of card in my life,never will.
I only use cash.

[Coffeecup]

Atm/debit cards are so convenient. So far my bank hasn't charged me for using mine. Only time I would get charged would be if I used a atm that wasn't connected to my bank.

[TVFactFan]

well the solution is easy, withdrawl all your money and go to another bank lol

[catlover79]

Originally Posted by TVFactFan

well the solution is easy, withdrawl all your money and go to another bank lol

Yeah, but what if EVERY bank does it?

[TVFactFan]

Originally Posted by catlover79

Yeah, but what if EVERY bank does it?

I know, hope the other banks don't copy

[catlover79]

Originally Posted by TVFactFan

I know, hope the other banks don't copy

Same here. God knows the public at large doesn't need this on top of everything else.

[Janice]

Of course, that's our bank. It's always something.

[Family Ties Forever!]

They're always looking for another way to get money out of people.

[catlover79]

Yup, they won't be happy until they suck every last one of us dry!!!

[Tweety]

The reason these ATM fees are popping up (at this point, from the "big" banks only), is because of Dodd-Frank.

Up until now, banks could charge merchants a small fee for every debit/credit card transaction that the merchant processed.

The Dodd-Frank "reform" bill drastically reduced the amount that a bank can charge merchants for debit transactions. The ATM fees are an attempt to replace the lost revenues.

At this point, it's mostly the "big" banks that are charging these fees. Community Banks will see this as an opportunity to attract additional deposit customers.

But the big boys wouldn't be charging these fees were it not for Chirs Dodd and Barney Frank (oh, and Barack Obama as well).

Incidentally, the name of the bill that brought all this on is "The Dodd–Frank Wall Street Reform and Consumer Protection Act"


How's it feel to be protected by Dodd and Frank (oh, and Obama as well)?

Kind of reminds me of the time Democrats in Congress set out to protect us all from higher Cable TV rates.