Swipe Fee Changes Equal Goodbye, Free Checking
[Updated 10/28: Banks appear to be caving left and right on adding additional debit card fees following the backlash on Bank of America. This editor still plans to leave Bank of America, because, people, please.]
[Editor's Note: Ruh-roh. Looks like Bank of America finally took its frustration about caps on swipe fees out on the little guy. And we saw it coming months ago. Here's my post from June 28 -- looks like that only took three months.
Guess what? New fees are coming. Let's look at the list of checking account fees already possible at my own bank, Bank of America.
Back in April, BlogHer Contributing Editor Wellheeled wrote about the two sides battling it out in Congress over swipe fees -- the small percentage that retailers pay every time you use your debit card. She wrote:
Both sides have hired lobbyists and written letters to Congress to advocate for their position. If these fees were slashed as the merchants want:
- Small business could prosper. Lower fees will help merchants grow their business and have more money for hiring and investments.
- Small banks and credit unions will lose a big source of their revenue and may even fail.
- The consumer could lose perks such as free checking accounts as banks try to make up for the lost source of revenue.
- If debit card fees are lower than credit card fees, merchants might encourage consumers to make purchases with debit.
Earlier this month, the Senate rejected an amendment to delay some changes to reform, according to Nation's Restaurant News. Apparently, restaurants and other retailers were really excited about this because it means the fees per transaction can be capped and controlled.
With banks holding assets of less than $10 billion exempted from the swipe fee reform, we're talking about the big dogs here. My cynical side knows they're not going to take a huge reduction like that in stride.
The Washington Post notes the reduction in income from swipe fees for big banks could be nearly 70 percent.
Guess what? New fees are coming. Let's look at the list of checking account fees already possible at my own bank, Bank of America. The list includes: overdraft item fee, extended overdrawn balance charge, overdraft protection transfer fee, non-suffient funds fee, foreign ATM fee, check enclosure fee, check image service fee, stop payment fee, late fee, returned item fee. I found out the hard way I can't even take money out of my savings account more than three times a month. Of course, when I went to look at its competitor Citibank, I couldn't even find a complete list of Citibank checking account fees. And since Chase doesn't offer checking in my ZIP code, I couldn't find their list of fees, either. Sneaky, sneaky. My least favorite bank, Capital One (full disclosure: the one that enticed me to make a balance transfer then immediately cut my credit line to exactly that amount and raised my interest rate -- I petitioned to have the account basically suspended to freeze the interest rate, which did work) says they have no fees! Only a list of Capital One special use charges.
And, of course, banks are testing new fees. From Susanna Kim at ABC News:
A Bank of America spokesperson said today, customers will not be able to avoid a monthly service fee in the new "Essentials" account, even if they maintain a minimum balance amount or by using direct deposits.
"Many of our customers choose to have a monthly fee. They like that predictability," said Susan Faulkner, Bank of America Deposits and Card Product Executive, during a press conference today.
So. What's the best thing to do? I have no idea. Do you?