By
Kenneth Long on October 3, 2011
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Bank of America is the first of the big banks to announce a $5 monthly debit card fee. The new fee will be imposed on any customer who uses their debit card for a purchase beginning in 2012.
Whether you swipe the card as credit or enter a PIN as a debit transaction, a single use of the card will trigger a $5 monthly fee. Unless you can gain a fee waiver, you are stuck paying the fee if you choose to use your debit card for purchases.
Will there be Any Fee Waivers?
Unfortunately, Bank of America has not yet released any guidance on which (if any) customers may be granted a waiver from the $5 debit card monthly fee. We expect that its best customers may potentially be extended a waiver of this fee, but we have not yet been supplied with this information. For example, Bank of America Advantage customers already receive checking account fee waivers, so we are watching to see if they will also be granted a waiver from the new fees.
Will the New Fees be Permanent?
Virtually nothing in the personal banking industry is permanent. That being said, there is evidence that these fees are here to stay.
While
Chase and Wells Fargo tested $3 monthly debit card fees in certain states, SunTrust has also announced it will charge a $5 monthly fee. Industry analysts expect the debit card fees to be copied by all big banks.
There is the possibility that Big Banks' nemesis may pursue legislation against the debit card fees. After all, Senator Dick Durbin was instrumental in new rules that cap the debit interchange fees that merchants must pay. This saved merchants money, but it is also costing banks billions in fee revenue.
Senator Durbin also helped enact legislation that limited credit card issuers from increasing interest rates "at any time, and for any reason." Instead, they may only do so if your account falls at least 60 days delinquent.
How May I Avoid the $5 Debit Card Fees?
There are ways that you can avoid the $5 debit card fee even if waivers are not allowed. First, you may continue to bank with Bank of America but treat your debit card as simply an ATM card. After all, that is how these cards were initially used before they were branded with a Visa, MasterCard or American Express logo. You may use your Bank of America (or any other) credit card for purchases instead of using your debit card.
Of course Bank of America would love for you to use your credit card instead of your debit card. This increases the chance that you may carry a balance and therefore incur finance charges. Additionally, the debit card interchange fees do not apply to credit cards, thereby increasing revenue opportunities for the bank.
If you want to continue using a debit card but do not want to pay the $5 fee, then you may jump ship. It might be worth contacting the bank to request a waiver prior to leaving.
Some small banks will avoid charging debit card fees. These will be easy to find, since this will be part of their advertising. They want to gain new customers that are turned off by big fees charged by big banks.
Finally, credit unions continue to be the top choice by those who seek consumer-friendly financial services. Credit unions have avoided many of the other fees that banks have been testing, including checking account fees and debit card fees. Credit union membership is often limited, but you can usually find a credit union near you in which you qualify to join.