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Bank of America to charge $5 debit fee

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  • Bank of America to charge $5 debit fee

    Bank of America to charge $5 debit fee

    September 29, 2011


    NEW YORK (AP) -- Bank of America plans to start charging customers a $5 monthly fee for using their debit card to make purchases. The fee will be rolled out starting early next year.

    A number of banks have already either rolled out or are testing such fees. But Bank of America's announcement carries added weight because it is the largest U.S. bank by deposits.

    Anne Pace, a Bank of America Corp. spokeswoman, said Thursday that customers will only be charged the fee if they use their debit cards for purchases in any given month. Customers won't be charged if they only use their cards at an ATM.

    The fee will apply to basic accounts and will be in addition to any existing monthly service fees. For example, one of the bank's basic accounts charges a $12 monthly fee unless customers meet certain conditions, such as maintaining a minimum average balance of $1,500.

    A fee for using debit cards is still a novel concept for many consumers and was unheard of before this year. But there are signs it may soon become an industry norm.

    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.

    The debit card fee isn't the only unwelcome change for checking account customers are seeing either. The banking industry has been raising fees and scaling back on rewards programs as they adjust to new regulations that will limit traditional revenue sources.

    Starting Oct. 1, a 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 fees that banks can collect from merchants when customers use their credit cards, however. That means banks may increasingly encourage customers to reach for their credit cards, reversing a trend toward debit card usage in the past several years.

    An increasing reliance on credit cards would be particularly beneficial for Bank of America, which is a major credit card issuer, 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.

    If the fee were $5, 66 percent said they would also change their payment method.

    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.

    http://finance.yahoo.com/news/More-b...&asset=&ccode=

  • #2
    So, run your checking balance down to under $5 with your debit card. Depending upon your timing, you account will be billed $5, and since your account is now in the negative, you get a $35 dollar fee for insufficient funds. LOL

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    • #3
      Another fee.

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      • #4
        Cash is king. Don't have a debit card so not an issue for me.

        Des.

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        • #5
          Originally posted by despritfreya View Post
          Cash is king. Don't have a debit card so not an issue for me.

          Des.
          Since it is difficult for me to carry cash, my CU is out of state, I love my debit card. Costs me nothing to run as a CC. If I were a B of A member, I would dump them. OF COURSE, they are "Too big to fail" so 'Bammy will give them our money anyway. Do I have a bad attitude? Hmmm, let me count the ways,,,,,,,, one vacant house, two vacant house, three........ One business out, two business out............... One lay off, two.................

          If you are my age, "flash, Duck and cover". 'Hub
          If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

          Comment


          • #6
            This kind of move actually makes sense when you consider that for years the banks (especially Bank of America and Chase) have been trying to cram Direct Deposit down everyone's throat. Although the banks claimed that this was for the customer's benefit and convenience (yeah, right), the truth was that they wanted to make it as difficult as possible for a customer to terminate their relationship with the bank, no matter how pissed off the customer becomes. With a large captive audience of people who receive their paycheck/government benefits via Direct Deposit, the bank is taking a gamble--which will probably pay off--that more people will simply "put up and shut up" than the number of people who will close their account due to the fee. As a result, the bank will make more revenue, while spending less on overhead, due to the fact that they will have fewer customers, so profits will increase.

            Personally, I would NEVER use Direct Deposit, nor would I pay a penny for the "privilege" of keeping my money in a bank account, or accessing the money via check or debit/ATM card. I am sure many other people think this way too, and will therefore close their account(s) at whatever banks start charging these fees and move their money to local banks or credit unions.

            However, this is a calculated move on the part of the big corporate banks. Instead of being the biggest in terms of number of customers and number of branches, the new strategy is going to be to try and squeeze as much revenue as possible out of a smaller number of customers, consolidate branches, lay off massive numbers of employees, and so on. Whatever attrition occurs as a result of these changes (i.e. customers closing their accounts and changing banks) that will simply be treated as a "restructuring" expense.

            Of course, I would have never used B of A in the first place, so hearing about their greed, while good for a few laughs, is otherwise of no significance to me.

            Comment


            • #7
              Originally posted by AngelinaCatHub View Post
              Since it is difficult for me to carry cash, my CU is out of state, I love my debit card. Costs me nothing to run as a CC. If I were a B of A member, I would dump them. OF COURSE, they are "Too big to fail" so 'Bammy will give them our money anyway. Do I have a bad attitude? Hmmm, let me count the ways,,,,,,,, one vacant house, two vacant house, three........ One business out, two business out............... One lay off, two.................

              If you are my age, "flash, Duck and cover". 'Hub
              Just for the record - TARP started with Bush :-)

              BUT - the present admin could order the FDIC to order BofA to cease and desist...

              Comment


              • #8
                This is yet more example of runaway..."capitalism" screwing the population.

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                • #9
                  this is such BS - I use my debit card for everything. Its MY frigging money and I already had to do direct deposit to avoid their $15 or whatever it is monthly fee.

                  Looks like I'll be pulling out every damn bit of $ we have and put it into a pre-paid debit card to use for paying bills, gas, groceries, etc.

                  At the very least I'd like to be asked my name before being screwed - grrrrrrrr.

                  Comment


                  • #10
                    Right Pandora!

                    There are SMALL!!! community banks and/or credit unions that arent' doing this though!

                    Comment


                    • #11
                      BofA to assess fees for debit card use

                      http://www.csmonitor.com/tags/topic/...ca+Corporation

                      Damn it! Don't they know I went through a BK, am working on my credit, and need to save every penny I have? I haven't used my debit card in months, I have moved over to just relying on my credit card, but I can see a point where I may need to use my debit card for something. What BofA is doing is like they are putting on a $60 annual fee for my debit card. And I get no rewards? Absurd!!

                      Now I really have to find a new bank.
                      Filed No Asset Chp 7 BK: January 2010
                      Discharged: August 2010
                      A life lesson well learned.

                      Comment


                      • #12
                        Anyone could have seen this coming. Fedgov placed limits on what banks could charge for per transaction fees, so they upped their fees in other places. This is what happens when the government tries to mandate what the price should be for a service instead of letting the market decide.
                        Pay no attention to anything I post. I graduated last in my class from a fly-by-night law school that no longer exists; I never studied or went to class; and I only post on internet forums when I'm too drunk to crawl away from the computer.

                        Comment


                        • #13
                          Originally posted by MSbklawyer View Post
                          Anyone could have seen this coming. Fedgov placed limits on what banks could charge for per transaction fees, so they upped their fees in other places. This is what happens when the government tries to mandate what the price should be for a service instead of letting the market decide.
                          With the utmost respect, I have to disagree with our esteemed contributor...I am indeed old enough to remember that before the industry was deregulated, savings and loans paid 5.25% interest on savings accounts, and you did indeed have free checking, no gimmicks, etc...where I grew up, we literally had 16 banks withing a three block radius...now there are four there...

                          Comment


                          • #14
                            Originally posted by Pandora View Post
                            this is such BS - I use my debit card for everything. Its MY frigging money and I already had to do direct deposit to avoid their $15 or whatever it is monthly fee.

                            Looks like I'll be pulling out every damn bit of $ we have and put it into a pre-paid debit card to use for paying bills, gas, groceries, etc.

                            At the very least I'd like to be asked my name before being screwed - grrrrrrrr.
                            Pandora here represents the success banks and retailers have had in getting people to quit using checks or cash to pay for their purchases. Think about those catchy VISA commercials where the poor schlub who wants to pay with cash is looked upon with disdain. Unbeknown to most card users, they pay an interchange fee to their bank for this convenience that is collected by the retailer. The average fee is around $.44 per transaction. All was well-card users enjoyed reward programs, free checking and other perks that were funded by interchange fees of approximately $6.6 billion annually.

                            Retailers love debit cards because they can hire idiots who unable to make change for a $5 bill and don't have to worry about theft from the cash register. But retailers hate having to pay the interchange fee.

                            Then Illinois Senator Dick Durbin decided to punish the banks by dictating a sharply lower cap on these so called interchange fees. Hmmmm, maybe the fact that Walgreen's is headquartered in his home state had something to do with his idea. Lower interchange=lower cost for the retailer. Dick's "Durbin Amendment" was added to The DODD-FRANK WALL STREET. REFORM AND CONSUMER PROTECTION (sic) ACT. Step back and think about how absurd the "logic" behind Dick's amendment was.

                            The law was passed when banks are on their a**es and have just been bailed out. Was the thought process like this?
                            1. Banks in trouble>
                            2. banks need to be bailed out with $trillions>
                            3. must cut bank revenues and profits to prevent repeat of 1 ....what?????

                            Sure Dick, banks will just kiss billion$ goodbye and there will be no impact on the banks or their customers. Dick's proposed interchange caps were raised by the Federal Reserve in the end because they had enough brains to realize that the whole debit card system would require wrenching changes that they felt were not in the best interest of consumers or banks. Dick's law kicks into effect tomorrow and is the impetus for the actions announced by BofA and other banks. Now I am no friend of banks.

                            I am in BK because of the stupidity, stubbornness and intransigence of a bank. Since they are not lending anybody any money, they earn next to nothing on their assets so they have to depend on fees.

                            As I write this I am thinking that maybe Dick's amendment will motivate them to start lending again. Then I think about the bank we are dealing with and come back to my senses.

                            Pandora, Durbin's amendment does not apply to smaller banks or CUs. Move your account to one of these institutions and you may avoid the fallout,as noted by IamOld.
                            Last edited by AngelinaCat; 10-18-2011, 11:33 PM. Reason: Readability

                            Comment


                            • #15
                              I would add that we could use the Post Office (don't laugh) and have them go into non-profit savings - this is/was done in many other countries...also, ND has its own state bank where the state keeps its own money - it USED to offer individual accounts...perhaps it should do so again...

                              Comment

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