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As their latest entry into the bank fee frenzy, Bank of America (BofA) is rolling out a new $5/month debit card fee. Only "premium" customers will be able to avoid the BofA monthly debit card fee, which will be $5 every month ($60/year) if you swipe your card at a merchant just once. “Apparently, you don't need to own a jet to qualify as a premium customer, but pretty darn close—you need either a mortgage at the bank or a lot of money, $20,000 in the bank,” said Deirdre Cummings, Legislative Director at MASSPIRG.
“Fee income is the fastest growing profit center for big banks. They are attempting to blame regulators for what they’ve done for years, which is: raise existing fees, invent new fees, and make it harder to avoid fees,” continued Cummings. “If there ever was a time to go find a local bank or credit union, this would be it.”
How consumers can avoid the Debit Card Fee:
(1) Consumers can switch to small banks or credit unions—which are not expected to copycat this fee. See MASSPIRG’s tips on how to avoid fees, Bank Fee Tips. To date, big banks haven't had to worry about people voting with their feet but maybe this is “a fee too far” or a "fee too high" and they will start worrying. Recall that earlier this year Chase tested a $5 ATM surcharge in Illinois—then dropped it.
(2) Use simple workarounds—use a credit card at the store (it’s also safer by law) or use the debit card at an ATM to get cash (ATM transactions do not invoke the fee) and then use cash at the store.
The Durbin swipe fee amendment is good for consumers. Merchants will pass along their savings because retail is competitive—if they don't pass savings along they will lose business. The amendment will also encourage the growth of less-risky PIN-based, instead of fraud-prone signature, debit card networks such as Visa/MC networks.
For more information see:
Senator Durbin's statement on this new fee.
Big Banks, Bigger Fees: MASSPIRG’s most recent report, on bank fees.
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