Big Banks Boost Debit Fees AgainBank of America's (BAC) announcement this week that it would start charging a monthly $5 fee for using a debit card to make purchases is the latest in banking industry upcharges for services. In addition to debit fees, ongoing hikes in overdraft and ATM charges mean fewer fee-free options for banking services, and increased balance requirements to get them. The bottom line is that consumers are now paying more to use their own money.

Other large U.S. banks, including Wells Fargo (WFC), J.P. Morgan Chase (JPM) and SunTrust (STI) are testing or planning monthly debit fees, according to Reuters. Citibank (C) has not announced a plan to charge for debit card use, but it has increased fees for checking accounts with low balances, and increased balance requirements for free services. For example, starting in November, holders of Citibank's EZ Checking accounts will have to maintain a balance of $6,000 across linked accounts or pay a $15 monthly fee.

Free checking accounts are increasingly rare. Two years ago, 76% of non-interest checking accounts were free. That figure has now dropped to only 46%, according to a recent survey by Bankrate.com. The survey also reported that overdraft fees are now an average of $30.83 and the average out-of-network ATM fee is $3.83.

The rising fees reflect the big consumer banks' efforts to offset billions in predicted losses due a fee-cap on merchant-processing fees under the Durbin Amendment. The new law goes into effect on Saturday, and caps interchange fees at 24 cents a swipe, previously that averaged 44 cents.

The net effect of higher fees for consumers, whether for debit card use or banking services, is especially troubling for younger people with lower incomes, says Andrew Schrage, 25, a personal finance blogger at MoneyCrashers. "These fees can severely hamper workers' ability to accomplish essential goals like saving for retirement or working to build an emergency savings fund," he said.

But the fees may not be a game changer for the debit card business, said Greg McBride, senior financial analyst at Bankrate.com. At least not yet.

"Fees are an exception, not a rule, and savvy consumers are not going to stand for new fees and higher fees," he says. "A lot of consumers will do a different method of payment or take their business elsewhere." His theory is that consumers will move to smaller or online banks, with lower fees, or use cash more often to avoid debit card and other fees.

According to the FDIC there more than 6,350 commercial banks in the United States. The debit swipe fee changes only affect institutions with at least $10 billion in assets -- less the 2% of them.

For consumers trying to navigate the new minefield of higher debit charges, the options include switching back to cash, using credit cards, or changing to a bank with lower or no fees. At DailyFinance, we'd like to know how these fees affect you, or if they've caused you to change your spending habits. Please share your experience in the comments section.

Catherine New is a staff writer with
DailyFinance. You can reach her at catherine.new@huffingtonpost.com.

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nthereoff

Take your money and run, to the nearest Creit Union.. Best saving rates and loans. It works for me

October 22 2011 at 7:16 PM Report abuse rate up rate down Reply
Ljohnson0220

Avoid charges altogether by using the Akimbo Visa Prepaid Debit card. You can keep your bank and just load the money into your Akimbo card. I've found using this to be a blessing and have even set up direct deposit to the Akimbo card. Check out their site at https://akimbocard.com/ . They really do have good customer service and the best thing about them is that they are absolutely free.

October 12 2011 at 4:16 PM Report abuse rate up rate down Reply
Brad Bartlett

Actually for me, living on a cash basis, being of moderate income to low, has worked well. I get out at the teller what I need for a week, in cash of course then divide up in envelopes for food/ extras/ daily "stuff", etc. It has worked for me! so planning on changing the debit card to an old fashioned atm only card if they still can...if not cut it in half and get cash out. Pretty disapointed in Bofa for now.

I only have the account free for direct ss deposit, if they change that well... hope not!

October 05 2011 at 12:42 AM Report abuse rate up rate down Reply
lesserf15

I started with B of A when they were Nations Bank and now I'm done! I am going to a credit union and closing both of my checking accounts. How stupid is it to get charged for getting your own money? This on the heals of losing a property I was trying to buy for my 82 year old mother because B of A could not get the deal done in time (2 extensions). Lost my $1000.00 good faith and the property. I hope you go under!

October 04 2011 at 7:05 PM Report abuse rate up rate down Reply
L

I closed my account there. To hell with BofA buffoons. And when I was there four people were also closing their accounts because of the same reason. I am tired of paying to use my own money. F that!

October 04 2011 at 12:33 AM Report abuse rate up rate down Reply
Spirit Dreamer

Closer the accounts with the SOBs.. That will teach them something. plus they owe all US citizens money from all the money the US government let them have from our taxes...

October 03 2011 at 6:22 PM Report abuse rate up rate down Reply
prznhymn

Yep...cash, credit card (for now), new bank...DON'T FEED THE GREED!!!

October 03 2011 at 11:18 AM Report abuse rate up rate down Reply
jmarsinisr

I won't use debit feature to purchase goods.

October 03 2011 at 11:06 AM Report abuse rate up rate down Reply
J.M.W.

I have picked one bank ( BofA), and will not do any business ( checking / credit card ) with them. If more just worked on one bank, it is a way to say, ENOUGH IS ENOUGH. They have used us for years, and still are using us, they want the deposit, and then we are treated as we do not count. The used car salesman must feel great, the banker is now below him

October 03 2011 at 11:05 AM Report abuse rate up rate down Reply
marimil

This bank is a joke. They add fees and service tanks even more than before. Have not been able to log onto online banking for 4 days and no one answers the phone! they are crippling my business!!!!

October 03 2011 at 10:59 AM Report abuse rate up rate down Reply