BofA To Start Charge Monthly Fee For Debit Card Use

Discussion in 'Economics' started by JamesL, Sep 29, 2011.

  1. JamesL

    JamesL

    Bank of America to charge $5/mth debit card fee
    By Andrew R. Johnson

    --New fee will start in early 2012

    --Bank looking to cushion revenue losses from credit card fee caps

    --Durbin amendment takes effect Oct. 1

    NEW YORK (MarketWatch) -- Bank of America Corp. (NYSE:BAC) , the largest U.S. bank by assets, plans to charge customers a $5 monthly fee for making debit card purchases starting early next year, according to an internal memo sent to bank executives Thursday.

    The fee will apply to customers with various checking accounts during any month they use their debit card to make a purchase. The fee will not apply to customers who do not use their debit card to make a purchase or who only use it to make ATM transactions.

    Bank of America is trying to cushion revenue losses it expects to incur from new caps on the fees merchants pay when a customer uses a debit card at their stores. In June, the Federal Reserve Board finalized rules capping such fees at 24 cents per transaction, compared with a current average of 44 cents.

    Bank of America has said it expects the caps, which take effect Oct. 1, to erase $2 billion in revenue annually. Industrywide, the caps, which apply to banks with $10 billion and more in assets, could wipe out $6.6 billion in annual revenue for banks, according to an August report from Javelin Strategy and Research.

    "The economics of offering a debit card have changed with recent regulations," a spokeswoman for Bank of America said in a statement Thursday.

    The fee will apply to various consumer checking accounts but will not apply to customers in certain premium accounts, the bank's memo said.

    "This new fee allows us to continue to offer the convenience of a debit card with the full range of added features customers have come to expect," including fraud protection and monitoring, special savings programs and other services, the bank's memo said.

    Other banks have introduced or are testing new fees in response to the debit fee caps, which stem from a provision known as the Durbin amendment in last year's Dodd-Frank financial regulation overhaul legislation.

    Wells Fargo & Co. (NYSE:WFC) , said it will charge a $3 fee for debit and ATM cards in several states starting in October if customers use the cards to make a purchase under a pilot program.

    J.P. Morgan Chase & Co. (NYSE:JPM) has been testing a fee in a small market in Wisconsin since February. Regions Financial Corp. (NYSE:RF) and SunTrust Banks Inc. (NYSE:STI) have also added monthly fees for some debit-card customers.

    http://www.marketwatch.com/story/ba...5mth-debit-card-fee-2011-09-29?dist=countdown


    Chutzpah!
     
  2. Bad move. They will regret that.
     
  3. I've been meaning to opening up an account with a local savings bank. They are offering 3.25% on balance in a checking account.
     
  4. i would pay 5 bucks not to have to hassle with checks but i dont understand why people would use debit cards anyhow. you get paid to use a credit card.
     
  5. Doesn't that bother you that they are willing to pay you 3.25% when fed funds is zero?