Bank fees are on the increase again this week with Wells Fargo announcing they will start charging debit card customers a monthly $3 fee. Bank of America recently announced plans to charge $5 per month for customers that use debit cards for purchases and will make $2.3 Billion from the new fee next year. Not to be left out, JP Morgan Chase announced a $3 fee earlier this year for their customers. Banks are responding to the Federal Reserve's recent action that reduced the maximum bank take on each debit card transaction from 44 cents to 24 cents.
Most consumers will accept the new fees because of the hassle involved in moving an account to a new bank. In response to Bank of America's announcement, Rep. Brad Miller, a Democrat from BofA's home state of North Carolina, plans to introduce legislation that would make it easy for consumers to switch banks. In the mean time consumers have few options in dealing with the new fees.
What can I do to avoid the new debit card fees?
Switch to another bank – Many small community banks and credit unions still offer free checking and free debit cards however if you have ever moved a checking account you know this is a hassle. This option can potentially involve a lot of work to contact and change the checking account number on all of your accounts. Most businesses have a website where you can update billing information instantly without worrying about missing a billing cycle. Payroll direct deposits on the other hand can take up to two payroll cycles to change so there can be an issue with your paycheck being deposited in one account while bills are being paid out of another account.
Use Cash, Checks, or Credit Cards for Purchases – Think about all the places you use your debit card: the gas station, grocery store, doctor's office, the Mall, and the list goes on. Using checks to make a purchase is inconvenient That leaves you with credit cards as the only option left to avoid the monthly $3-$5 fee. As long as you pay off the balance each month, a credit card is an option and may even earn you reward points on your purchases. If you fail to payoff the balance monthly the fees and interest will probably surpass the debit card fee you were trying to avoid in the first place.
Do I have any other options?
Pay the fee. I bank at Wells Fargo and will soon be paying the monthly $3 fee for using my debit card. I'm not real thrilled about paying the fee but will pay it for now in order to avoid the hassle of opening a new account at another bank.
How about you? Are you dumping your bank or are you going to pay the new fees?