Bank Fees: What's the Breaking Point for Customers?

Is there such a thing as a reasonable bank fee? One in three people say they are prepared to walk away from their financial institution to avoid a fee, according to a new survey conducted by The Research Intelligence Group, a market research firm.

Bank of America (BAC) learned pretty quickly last month that customers think $5 a month is too much to pay for using a debit card. Consumers and commentators expressed outrage that a formerly free service would now cost $60 a year. Wells Fargo (WFC) and Chase (JPM) are testing $3 fees for the same service in selected areas.

However, 13% of 1,000 respondents said that they would be willing to pay bank fees if they were reasonable.

So is that $5 reasonable? According to Bank of America, the fee covers fraud protection, overdraft prevention, record keeping, fraud monitoring and savings programs. While the bank did not respond to exactly how that fee price point was attained, it was likely implemented to make up for what the bank estimates it will lose per customer under new rules imposed by the federal government. In the past, banks charged stores about 44 cents each time a customer used a debit card. Now, they're only allowed to charge 24 cents. That's a 20 cent loss per swipe. The $5 fee is likely based on data that the average customer makes 25 debit card purchases a month, amounting to $5 in lost transaction revenue, according to the blog Consumer Affairs.

Wells Fargo says that the new law, part of a larger financial overhaul called the Durbin Amendment, is part of the reason that they are testing a $3 debit card fee in five states, but that there are other proprietary reasons for the fee. Chase started testing a $3 debit-card fee in two markets last February and says it has no plans to expand at the moment.

Sound fair? To be sure, bank fees are not that uncommon. Who hasn't ponied up a few dollars to pay an ATM fee? Many checking accounts charge monthly fees, as well.

But clearly the debit card fee touched a nerve. If more customers do wind up walking away from their banks, increased fees may have an unintended consequence of simply making banking unaffordable for millions of low-income Americans.

On principle, is charging a bank fee at any level too much? Or can you simply not afford to pay any more for banking services?


Catherine New can be reached at catherine.new@huffingtonpost.com.