Is it time to ditch your debit card?
Thanks to new fees, the debit card has become the least-friendly piece of plastic in your wallet.
This post comes from partner site SmartMoney.
What's the least-friendly piece of plastic in your wallet? With Bank of America's recent announcement that it will start charging for debit card use, upset customers might say there's a strong argument it's the debit card -- and increasingly, there are better alternatives. Post continues after video.
The change in debit card terms has been gradual. Most recently, Bank of America announced its plans to levy a $5 monthly fee for making debit card purchases starting next year. Banks including Wells Fargo, SunTrust and Chase have already eliminated debit rewards programs, and Chase, PNC and TD Bank are testing ATM fees as high as $5 a pop in some markets. (Other banks have imposed or are testing a debit card fee.)
Given the rising costs, consumers may be better off without debit cards at all, says Dennis Moroney, senior analyst covering bank cards at TowerGroup consulting firm. "I never understood why people wanted debit cards in the first place," he says.
Credit cards can often be a better fit. Consumers who pay off their balances in full avoid expensive interest charges and fees, often while earning rewards of 1% or better. And as recent data breaches have highlighted, credit cards offer better protections than debit cards in the case of fraud or theft. (When debit cards are stolen, consumers risk losing everything in their checking account if they don't report the theft before the card is used.)
Banks are also expected to start pushing prepaid cards as a debit alternative, says Odysseas Papadimitriou, chief executive at credit card comparison website Card Hub. American Express became the first major bank to introduce one earlier this year.
Of course, most of these cards aren't free either. Users with the American Express prepaid card get one free ATM withdrawal each month, then pay $2 for each one thereafter -- in addition to any fees the ATM's owner might charge. The Green Dot Gold Prepaid Visa card may seem closer to a traditional debit card: For someone who signs up for direct monthly deposits of at least $2,000 and visits the ATM at least once a week, the card levies no additional fees, according to Card Hub.
Is cash king?
Remember cash? No fees or fine print, and more businesses are offering discounts for shoppers who use it. Of course, if it's stolen, there's no way to recover it. So even consumers who go cash-only should maintain a checking account with ATMs convenient to work and home, says Richard Barrington, an analyst at MoneyRates.com, which tracks bank rates.
For anyone who still really wants a debit card, smaller banks and credit unions may be the best alternatives. At online bank PerkStreet, for example, customers can earn up to 2% cash back on their debit purchases, as well as 5% on specific categories, like housing or dining, that change each month. (The bank has 37,000 ATMs throughout the country.)
At Sovereign Bank, debit card holders get up to 20% cash back on purchases at more than 1,200 retailers, including Restaurant.com, TurboTax and Brookstone, which is then credited to their checking account.
Readers, would you pay $60 per year to use your debit card?
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Readers, would you pay $60 per year to use your debit card?
It's my money, and I WILL NOT have the greedy banks taking advantage of me because of their past loan practices!!!!!!!!!!!!!!!
If you dont like the fees, move your money to a bank or CU that is more client friendly. THAT and only that move will influence the big banks attitude.
So I go to logon to my account so I can remove all of my savings and checking money and find out that Bank of America has disabled the ability to login to accounts (they say that the website is having issues, but I do not believe that).
I have over $50,000 in savings at Bank of America that I will now be moving to a credit union on Monday. I will no longer do business with BoA nor any other bank that imposes such unfair (in my opinion) fees on the already impoverished.
Lets all go back to using checks. The greedy banks will get buried with extra paperwork and handling and processing charges. I will leave BOA and switch to a no fee bank
Let BOA go DOA
Post office has a big sign on door "No cash accepted"
How many places say exact change and then have some obnoxious amount do.
And then there is "no bills over $20 accepted" I understand if a business first opens up or someone is using a $50 for a pack of gum, but what about major purchases kinda hard to carry around alot of cash in smaller amounts.
I think its funny that the tax payers had to bail out these major banks and how do these major banks repay the taxpayers after taking their money??? Charging them a fee to use their own money
Keep your debit card - ditch your bank. CU's are the only way to go. And if you need cash, pop into the grocery store, buy a pack of gum and grab an extra $50 - no fee.
I for one can just go back to checks. How funny that paying by check could suddenly be back in vogue again.
Some progress, eh?
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