New Debit Card Fees – The Big Banks are at it Again!

27 August, 2011

Debit Card Fees Just a Test?

Wells Fargo announced August 17, 2011 that they will “test” a $3.00 monthly debit card fee for some customers in the states of Georgia, New Mexico, Nevada, Oregon, and Washington beginning October 14, 2011.

They join Chase, Regions, and Suntrust banks in the practice of charging the consumer a monthly fee to use their debit card. Is it a matter of time before all banks add this fee to the long list of the ones they are already charging you?

So why do the big banks want to charge you to use your money? Wells Fargo is but one example of the banks that claim they must make up for their losses of revenue due to new regulation from the Dodd-Frank Act.

The Dodd-Frank Act provides for more government regulation of the financial services industries, including the banking industry. The legislation instituted a reform in the fees that banks can charge merchants, particularly for debit card transactions.

Now, there is a cap on the amount banks can charge retailers for “swipe fees,” or the amount they charge per debit card transaction. The previous amount was 44 cents, but that will be lowered to 21 cents beginning October 1, 2011.The end result is a merchant will now pay less to process the transaction, but the bank will receive less money for each transaction.

This should translate into savings for you, the customer, but it seems the opposite is true. In order to recoup their monetary losses, many banks will now charge you for the privilege of using your debit card to make purchases or pay bills, by adding on a monthly debit card fee of $3 to $5.

How much are the fees?

Wells Fargo will charge $3 per month in the states of Georgia, New Mexico, Nevada, Oregon, and Washington beginning October 14, 2011. Chase currently charges $4, Regions Bank and Suntrust Bank charge $5 per month for debit card purchases and bill payments. These fees are all in addition to the other fees you pay for checking and savings accounts.

Laurie Readhead, a retail banking executive at Bank of America Corp. (BAC), told investors in May “Pricing for debit cards, thats something that were talking about potentially testing. She said Wednesday, the day of the Wells Fargo announcement, Bank of America wasnt testing a debit fee at this time, but we are evaluating pricing across all our payments products.

What are my options?

You can always take your business elsewhere. Local banks offer more personalized customer service and some may have lower fees for basic banking services. However, community banks will have less ATM locations than the big banks, which means that when you travel you will have to pay another banks ATM fee, which can be as high as $5 for a cash withdrawal.

Credit Unions are another option because they charge lower banking fees in comparison to the big banks. They also have better rates on loans and again, more personal attention but they dont provide the same number of ATM and branch locations as the larger banks.

Online banks, or direct banks are another choice for many consumers who want to avoid excessive fees and get better rates for savings and checking accounts. Depending on the bank, you can also access free ATMs of their choosing.

Compare the costs associated with debit card fees, and other banking fees when you are a customer of the larger banks to the lower fees of a smaller bank. Take into consideration the convenience factor of ATM availability and account mobility when doing your research to find what type of bank will best suit your needs and give you the best rates and lowest fees for banking services.

Death, Taxes, and Fees

Benjamin Franklin said “In this world nothing is certain but death and taxes.” Well, we may have to add bank fees to that quote if Wells Fargo, Chase, and others continually nickel and dime their customers for the sake of profit over customer service. Short of buying a safe and keeping all your cash at home, or carrying around a checkbook again, you will have to choose which bank you do business with, so choose wisely.

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