Smart SpendingSmart Spending

More banks say no to debit card fee

Other big banks have decided not to follow Bank of America's unpopular example. Meanwhile, B of A is reportedly making it easier for customers to avoid the fee.

By MSN Money Partner Oct 28, 2011 2:18PM

Updated 5:02 p.m. ET


This post comes from Catey Hill at partner site SmartMoney.


SmartMoney on MSN MoneyGiven the fallout from Bank of America's introduction of a $5 monthly charge for the privilege of shopping with a debit card, experts say it's not surprising other big banks such as JPMorgan Chase now insist they won't be following suit.


But rather than eat the lost revenue from the recent 50% reduction in surcharges merchants pay for debit card purchases, some say banks will just find new and creative ways to impose costs on consumers.


Meanwhile Bank of America is reportedly looking at ways to make its fee more palatable to customers. Reuters says:

Bank of America Corp., after receiving heavy public criticism for a planned $5 per-month debit card fee, is likely to give customers more ways to avoid the fee, a person familiar with the bank's plans said Friday.
The second largest U.S. bank is likely to allow many customers to avoid the fee by taking measures such as maintaining minimum balances, having paychecks direct deposited, or using Bank of America credit cards, the person said.

Already this year, banks have made checking more expensive. While 65% of checking accounts last year didn't have monthly fees, less than half can claim that this year, according to a study from And experts say we can expect more than just an increase in monthly checking account charges going forward.


"We're going to see more creative, stealth-like fees," says Dennis Moroney, research director at TowerGroup.


A new kind of debit card fee

Among the fees some banks will likely levy or raise going forward, he says:

  • Inactivity fees on debit cards (so you'll pay if you don't use the card at least a few times each month).
  • Fees for getting a paper statement or to speak to an agent.
  • More punitive fees like a higher charge for bounced checks.

What's more, banks will likely eliminate debit card rewards programs, says Greg McBride, a senior financial analyst with "We've already seen a 30% decline in those programs over the past year," he says. "We'll see more of that." Post continues after video.

These kinds of fees may anger consumers, experts say. "In this economy, every dollar counts," says McBride. "A lot of people won't stand for these kinds of charges -- they know better alternatives exist."


We're already seeing evidence of this: Nearly 9% of consumers said they had switched banks in the last year, compared with 7.7% the previous year, according to the 2011 U.S. Retail Bank New Account Study by J.D. Power and Associates.


One of the best ways to avoid pricey checking is to opt for a smaller bank, credit union or online bank, says Tim Chen, CEO of More than three in four credit unions have free stand-alone checking accounts, compared with just 45% of bigger banks, a survey finds.


One of the reasons for this is that many of these smaller institutions (since they have assets of less than $10 billion) were not subject to a recent regulation that slashed by half the amount banks could charge retailers each time a consumer swiped his debit card at the store, says Brooke Firchow, a spokesperson for, a site that lists checking account offers and terms. "This was a big source of revenue for big banks, and now they're trying to make it up in fees," she says.


You can find credit unions in your area at, and offers a list of low-fee banks.


More on SmartMoney and MSN Money:

Oct 28, 2011 3:18PM
Run from your bank to any bank that does not charge fee's. Lets do a net flix's on them.
Oct 28, 2011 3:19PM
The Banks need to replace their CEO's with super computers. Super computers work for the cost of the electricity it needs to operate. They do not need big bonus's, and they do not  require a golden parachute after ruining the operation. 
Oct 28, 2011 3:35PM

Should have let the rotten bastards go bankrupt.


Oct 28, 2011 3:29PM
The banks need to "replace" their fees by cutting executive compensation, and I'm not just talking about CEO's and CFO's either. The whole executive class needs to feel the bite. These folks have talked themselves into believing (1) the myth of the essential "job creator" executive and (2) the righteousness of their charging customers for keeping their money at the bank.  If banks would start making loans again, that might bring in some income, but NOOOOOO! So cut the big boys or everybody leaves the party.
Oct 28, 2011 3:27PM
Closed out a small account I had at Sun Trust, and they had the nerve to ask me why.  When I told them, they said it would take 21 business days to get my check.  I asked them how many millions of people closing their accounts had caused the back log that made it take five weeks to close my account and mail me $62.00.  I hope they lose all their customers and don't have any money left to make money with.  Everyone should withdraw every penny they have in Bank of America, Chase, Sun Trust, and every other bank that thinks that their small customers aren't important.  Where do they think their money comes from anyway? 
Oct 28, 2011 3:44PM
Doesn't anyone feel the pain of all of the bigs at the banks. These poor people are barely getting by on their miserly salaries of only hundreds of thousands of dollars a month. And how far do you think those tiny little multimillion dollar bonuses go when you own 14 homes? My heart goes out to these CEO's, COO's etc. that are suffering with an income that only allows them to own 1 jet at a time. We the overpaid minimum wage employees should be happy to part with more of that evil money. Thank God the banks stopped giving interest that actually gave you something to look forward to every month. Now any interest you get is overshadowed by these tiny fees. Why just this past year my account was overdrawn accidently by .39. Yes 39 cents. Thank God the bank covered for me and only charged me a $40.00 overdraft fee which they did 3 times {I took 4 days to repay} before I noticed the error and deposited cash to cover it. At least I didn't have to go to a loan shark who would have charged me an illegal % in interest. We need to take up collection to help these poor bank heads so they can live large and get everything they want. Please excuse me, I have to end this now as my boots are now filled with some smelly squishy stuff that wasn't there before I started this. Sarcasm at its best. Peace. .
Oct 28, 2011 3:23PM
I canceled my B of A Alaska Air VISA card even though it wasn't a debit card or had new fees imposed. B of A is basically a Wall Street poster child.
Oct 28, 2011 4:30PM
The one thing that really grinds me is banks and even cable companies are charging you now (generally, $5) just to talk to a human being (on the phone, or in person).  That's greed not matter how you look at it.
Oct 28, 2011 3:31PM
I've switched to a credit union yrs back fees are better and people are nice. Seeing the outcome of netflix this shows that if the poeple standup and leave the big guys come around to our and rates get better. This has to happen to the big banks if all of us would pull our monies and go to smaller banks or C U s then we would see the big guys comearound. Just think if all would pull just 100.00 dollars out and start a new account with the small areas of the industry, See if the top execs get their millions in bouns then.            
Oct 28, 2011 4:34PM
People should boycott B of A they don't deserve to be in business, this shows total disregard for their customers.  In today's environment you would think management would do everything they can to maintain their customer, not alienate it!
Oct 28, 2011 4:34PM

So, if the bank calls me, for any reason, can I start charging them for the call and my time (my time means money) if I give them written notice that I will be doing so? I should think that I should be able to do that myself if they can do it to me while managing MY money. I think I will!


I know.....good luck with that.......

Oct 28, 2011 4:27PM

I'm an absolute believer in firing a person, company or large organization that fails to satisfy my needs as a customer. If your unhappy, fire your bank and get one that works for you. You do them a favor by letting them hold onto your money. For the priviledge you get a pitful 2% or less in interest, and the honor a paying them for every sad service that they provide you. The bank however is using your money, along with the money from thousands of others to profit from loans, investments, aquisitions, and a host of other ventures from which they make millions per year. Because you have a choice you get to tell them what does and does not work for you so the next time you see the CEO get a huge payraise just after you have been hit with yet another fee. Take your money and walk. When the bonus checks start getting smaller or stop and the share prices start to drop, care for the customer will return and if it doesn't then there's always the Lemahn Brothers or Netflix effect.  

Oct 28, 2011 3:11PM
I believe the author meant to type 'NCUA(dot)gov' when trying to find a credit union in your area.  The NCOA is the National Council on Aging.
Oct 28, 2011 4:02PM

Since I still have a job, I don't realy have time to participate in Occupy movement. But one doesn't need to be out on the streets to make an impact. I am doing my part by closing my BofA and Chase accounts and rerouting my and my wife's 6-figure direct deposits to local credit union instead. How do you like that, BofA?

Please people, do the same, let them feel the heat!

Oct 28, 2011 4:15PM
I've been with my credit union over 45 years!  Paid for 3 houses, cars, kids college loans, and vacations.  I have free checking and debit.   I've never been disappointed in their service.  I've seen banks in my town come and go.  Name changes, consolidations.  My credit union is still the same.  You couldn't make me change to a bank!!
Oct 28, 2011 4:05PM
I don't get it!  As you can see by the Netflix debacle.........we have the power!  No matter what the injustice, be it bank fees, exorbitant oil and gas profits (i.e. Exxon), outsourcing jobs, or corps paying no taxes, change banks!  quit buying Exxon gas!  buy only made in America!  and don't purchase GE products!  It's so easy!  I just don't understand why we complain about it!  Do something!
Oct 28, 2011 4:05PM

For everyone who hates BoA but has an account with them -- why?? It's not like they're a monopoly (like Microsoft); they're not the only game in town. Shut down your BoA accounts and go elsewhere. I "inherited" BoA as my mortgage lender when they bought Countrywide, which I had my original mortgage with.  I can't say I had any personal troubles with BoA, but I find them as a corporation so loathesome and irresponsible and greedy and I could not stand the very thought of any of my money going to them.  So I refinanced.  I got into a 15-year mortgage at a better rate which was great, but my primary motivation was to be rid of evil BoA.

Oct 28, 2011 3:15PM
"better alternatives exist".  Yea, CASH OUT, if you have any.  Put your money in the cookie jar like grandma did back in the day.  If you need a pepsi, loaf of bread, or a pack of smokes, just use the paper stuff.  If we all said NO we will not conform or be controlled by the greed of corporate america, sooner or later the normal everyday citizen will be heard.  My household is already making plans.  Cashing out to reinvest...gonna buy some chickens for meat and eggs, some goats for milk and meat, a hand pump for that well that has sat idle too many years.  My grandkids may not need money (paper stuff).  May be a barter system before its over.  "I got eggs, what you got to trade?"  Things cannot continue as they are. An old saying from when I was a kid, "the higher you fly, the harder you fall".  I think I will see it in my lifetime.
Oct 28, 2011 4:32PM
Here's another suggeston - 'go local' and bank with your local community bank! by banking locally with a community bank, you are making a hometown investment. The money you deposit in your community bank will be reinvested in ways that drive your local economy, such as in the form of loans to local residents and small business owners who are looking to open shop on Main Street...not Wallstreet!  As small businesses themselves, community banks only thrive when their customers and communities do! So taking care of their customers and looking out for the best interest of their community is ingrained in the way they condust business each day.  Yes, Credit Unions have lower fees and lower interest rate, but did you know that they do not pay the taxes your local community banks do that are reinvested in your state and community?? They are not regulated as strickly as your local community bank is?? I would rather bank with a financial institution that is going to give me free accounts, low or no fees, and is involved in my community and economy of my surrounding neighbors!
Oct 28, 2011 4:18PM
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.