Bank of America to Add $5 Monthly Debit Card Fee
Bank of America has joined a growing list of banks that charge consumers a monthly debit card fee.
Starting early next year, Bank of America will charge $5 in each month that customers use a debit card for a transaction. There will not be a charge in the months you don’t use your debit card, and ATM withdrawals are not included.
Word of this new fee came two days before the October 1 implementation of the new interchange fee regulations for debit card purchases. Banks are expected to lose billions of dollars with this reduction in swipe fees. Before the recent legislation, the interchange fee averaged 44 cents per transaction. Now, the reduced fee will be 21 cents plus an additional amount to cover losses from fraud.
Banks are scrambling to make up for this lost revenue in a number of ways, and many major banks have added a monthly fee on debit cards. Bank of America is simply the latest, and largest.
Wells Fargo announced last month that it will test a $3 monthly fee for debit card users in five states: Georgia, Oregon, New Mexico, Nevada and Washington. Customers can avoid the fee if they don’t use their debit card or sign up for designated checking accounts. Chase is testing a monthly fee for debit card usage in northern Wisconsin. In June, SunTrust bank launched Everyday Checking that charges customers $5 per month for debit card use. Regions Bank will add a monthly $4 debit fee to certain accounts in October.
In addition to adding fees for debit card use, some banks have added monthly fees on checking accounts and eliminated debit card reward programs.
Banks have lost a great deal of revenue in the past few years with the CARD Act and the Durbin Amendment. The banks have to make up for this loss of revenue with either new fees or increased rates, and it is always the customer that ends up paying for it. Charging fees on debit card use and checking accounts are two ways that banks can make a significant amount of revenue very quickly.