Slapping in more fees

REALLY!?

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.

Pineapple this pomegranate. I'm going back to using straight cash if all banks do this.

You can still use cash without a fee.

"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."

Bank of America, leading the way in being f'ucking retarded.

The hell is this. Debit cards have always been free here. Honestly at times it seems like America is TRYING to keep itself behind.

Well, I can see how this is needed to keep the banks from going broke themselves. Five dollars per month to use my card instead of carrying cash seems reasonable, in my opinion, and I think other banks will follow suit with this.

Wait im still not understanding, do you pay 5$ extra per purchase or once a month? if its once a month it MAY not be that bad (60$ a month for having a Debit Card).

It's 5 dollars per month, the first time you make a debit card purchase that fee is gonna get tacked on. Any other purchases that month don't get that fee tacked on since you already paid it.

You have to pay 60 bucks a month for a debit card?

I get charged $12.50 if I transfer money between my accounts more than six times a month online.

I honestly hate banks.

Actually I think Wells Fargo went way ahead (at least a month ago) with this. Was not quite happy but then I realized I never use my Debit card anyway, but this is assuming Debit card is a separate entity from (acting as a gateway to) a checking/savings account.

Wait im still not understanding, do you pay 5$ extra per purchase or once a month? if its once a month it MAY not be that bad (60$ a month for having a Debit Card).

:f6:

You really pay that much??

But this just bothers me because it's $5 just for using the thing. I didn't even understand why there's an ATM charge for those who don't use the same bank (still don't honestly). Oh my god I will HATE going grocery shopping with my parents and having to hear my dad say "Where's this extra $5 charge coming from?"

To clarify: Bank of America is charging, once a month, $5. Total. If you use the card to make a purchase (as in, not at an ATM) that month.

What we're seeing out of BoA is basically the flip side of why some restaurants or gas stations you frequent offer cash only discounts - to avoid having to pay the credit card transaction fees (and maybe cheat on their taxes). Due to the financial reform bill, the entire small balance checking account industry just lost a whole lot of revenue, since those fees are now capped.

It's only natural that the banks either stop providing the service that suddenly makes them way less money or raise the price they charge to do so.

If you think checking accounts should be free just because they were before, it's because you didn't see the cross subsidy that was keeping them free. Is Bank of America going to be charging more than they need to to break even on checking accounts? Probably, but they've got a lot of horrifically bad mortgage investments on their books to counterbalance...

You have to pay 60 bucks a month for a debit card?

:f6:

You really pay that much??

Considering 5*12 = 60 I am fairly certain he meant per year when he said per month, referring to the annualized maximum cost of this program.

lol my bank reimburses my ATM fee's ./brag

lol my bank reimburses my ATM fee's ./brag

This week.
Next week they'll have compulsory tissue harvesting.

This week.
Next week they'll have compulsory tissue harvesting.

In an environment with some major banks making plans to charge customers new monthly fees for using their debit cards, USAA Bank announced today it has no plans to add fees to its debit card. USAA Bank remains committed to offering a free checking account — and free debit card — with superior features such as:

BIATCH

$5/month? Not bad. Wells Fargo is talking about charging me every time I use my debt card.

Seriously people, stop using Bank of America (or any other national chain for that matter). It's been beyond horrible for years with all the stupid fees. Just go open an account with a local bank or credit union and you'll find things a lot nicer.

The credit union here always brags about having lower/less fees and higher interest rates than "banks", which is true when compared to the national chains. However, my local bank even beats the credit union.

/Fun fact: The 'Bank of America' was known as the 'Bank of Italy' when it opened.

This has been around in my bank as long as I can remember. Of course there's the nice loophole we always use when handing the card over of saying "I want to treat it as credit" and we never get fees. Granted our fees were on a per use basis. Local bank, not a large one.

my Multi-tude debit card(DBS bank) is 24 dollars a year :f6:

The study also found that the total average cost for using an ATM rose to $3.81, from $3.74, the year before.

You can still use cash without a fee.

"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."

Many of Bank of Americas accounts charge you a monthly fee if you withdraw cash from within the bank, using an ATM not associated with BoA gives you a fee. Cashing a paycheck without a bank generally costs 1% of the check or $5 depending on where you go.

The only way to have an all cash existence with a BoA account is to go to the bank, stand outside, and use THEIR atm. Assuming they're not ass hatting with a fee of their own for ATMs.