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.
Updated 5:02 p.m. ET
This post comes from Catey Hill at partner site SmartMoney.
Given 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 Bankrate.com. 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 Bankrate.com. "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 NerdWallet.com. More than three in four credit unions have free stand-alone checking accounts, compared with just 45% of bigger banks, a Bankrate.com 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 CheckingFinder.com, 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 NCOA.org, and Bankrate.com offers a list of low-fee banks.
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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.......
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.
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!
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.
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