Sep 29 - Bank of America to Start Charging Debit Card Usage Fee

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 6 years ago '05        #1
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Gateway972 47 heat pts47
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Sep 29 - Bank of America to Start Charging Debit Card Usage Fee
 

 

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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 a.ssociated 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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 More bad news for bank customers: Debit card fees - Yahoo! Finance

109 comments for "Sep 29 - Bank of America to Start Charging Debit Card Usage Fee"

 6 years ago '04        #2
hockeythug 66 heat pts66
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Thanks Dodd and Frank
 09-29-2011, 07:26 PM         #3
pabloescobarjr 
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chase better not start doing this. I buy everything with my debit card.. only people I pay with cash are drug dealers.
 6 years ago '09        #4
McmasterlockPt2 41 heat pts41
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I hope my bank doesn't start doing this sh*t
 09-29-2011, 07:36 PM         #5
Bob Sacamano 
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 pabloescobarjr said:


chase better not start doing this. I buy everything with my debit card.. only people I pay with cash are drug dealers.
hah for real, peep this though



U.S. Senator d!ck Durbin (D-IL), who sponsored the swipe fee amendment, released the following statement today in response to Bank of America's decision:

“It seems that old habits die hard for Bank of America. After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers. It’s overt, unfair and I hope their customers have the final say.”

“Earlier this year the Federal Reserve determined that the interchange fees Visa and MasterCard fix for big banks grossly exceed the cost of processing a debit card transaction by some 400%. These hidden fees were designed to boost big-bank profits by charging small businesses and merchants every time a debit card was swiped. And profit they did. Bank of America hauls in billions in debit interchange each year.”

“Thankfully, on October 1st that flawed system will be replaced by a more transparent and competitive market. Swipe fee regulation will still allow banks to cover the actual costs of debit transactions but will rein in the banks’ excessive profit-taking. Small business and merchants will benefit from fee relief and consumers will benefit from lower prices. And banks that try to make up their excess profits off the backs of their customers will finally learn how a competitive market works.”
 09-29-2011, 07:48 PM         #6
StayBlazin1 
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 Bob Sacamano said:
hah for real, peep this though
Bank of America hauls in billions in debit interchange each year.”


 6 years ago '06        #7
RAZAH CUTS 5835 heat pts5835
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 pabloescobarjr said:


chase better not start doing this. I buy everything with my debit card.. only people I pay with cash are drug dealers.
if U.S. Bank even fu*kin tries this bullsh*t my accounts and I are joining a credit union...
 6 years ago '04        #8
ruff 6 heat pts
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Damn, how much more money do these jews want from me??
 09-29-2011, 08:02 PM         #9
Lukeshuel 
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 pabloescobarjr said:


chase better not start doing this. I buy everything with my debit card.. only people I pay with cash are drug dealers.


if chase starts this bullsh*t my account gonna be closed and il keep my cash at home
 6 years ago '06        #10
Malcolm 34 heat pts34
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 6 years ago '10        #11
marribarri 
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Customers were asking me if this was true, I told them no.

 6 years ago '05        #12
Gateway972 47 heat pts47 OP
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 marribarri said:
Customers were asking me if this was true, I told them no.

n*gga you lied.... im moving my money o schwab
 6 years ago '10        #13
marribarri 
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 Gateway972 said:
n*gga you lied.... im moving my money o schwab
Got the memo late in the afternoon.
 6 years ago '04        #14
WhoThaFuk 2 heat pts
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Oh, Capitalism
 6 years ago '05        #15
Based_One 79 heat pts79
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My bank been doing it .30 charge to run card as a debit
 09-29-2011, 09:58 PM         #16
reese0809 
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and this is why i will keep my two credit unions until the day I die. Bank of America screwed me over when I was in college and I see they continue to screw the whole fu*kin United States over as well. Greedy bastards! !
 6 years ago '04        #17
hockeythug 66 heat pts66
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I have have had a local bank for a while. Cant beat it.
 6 years ago '05        #18
YARKONE 4 heat pts
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there was always charges for using debit at my bank. nothing new.


edit: maybee why canadian banks did great during the crash


Last edited by YARKONE; 09-29-2011 at 10:43 PM..
 6 years ago '05        #19
C. Wat 3 heat pts
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sh*t costs money these days...
 6 years ago '04        #20
JBeezy 1 heat pts
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 WhoThaFuk said:
Oh, Capitalism
How is this an indictment on capitalism? Capitalism allows competing companies to benefit from another company's mistakes. If Bank of America customers really have a problem with this, they'll take their money to another bank or a credit union that doesn't charge for debit transactions. All they have to do is take action and not just bi*ch online.

If enough people tell BoA to fu*k off, they'll smarten up and cut this bullsh*t out. No one is forcing anyone to stay with BoA. They're free to look elsewhere for a better option. That's capitalism.
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