Banks Cancel Plans for Debit Card Fees

FOR IMMEDIATE RELEASE
Los Angeles, California, United States of America (Free-Press-Release.com) November 9, 2011 --

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Banks Cancel Plans for Debit Card Fees

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In the recent past, many large banks floated the idea of charging a monthly fee on their debit card customers—sparking outrage from coast to coast. Wells Fargo and Chase implemented pilot programs in a few states to test a $3 monthly fee if the card was used at least once in a given month for purchases. Of greatest note, Bank of America also announced that it would implement a similar monthly fee for all of its customers, except the fee would be $5 instead of $3. While consumer protest has made the banks back off charging the fee (for now), it still begs the questions: How did this all start, can it happen again, and what can you do to protect yourself in the future?



It all started with Senator Dick Durbin

Back in the early part of 2010, many merchants began to publicly complain (and later to lobby congress) about the cost of swipe fees, which are the fees that a retailer's bank pays to the customer's bank every time a customer's card gets "swiped" at a store (we wrote an article on this back in April of 2010, which you can read here). One of the main reasons retailers lobbied for swipe fee reform is that they felt the fees were too high, and that they were controlled by a “monopoly” of Visa and MC. Senator Durbin of Illinois took up their cause (although, ironically, consumers had never filed a complaint about the so-called swipe fees). . Durbin introduced an amendment to financial reform legislation that would, among other things, allow the Fed to issue rules that would limit the amount charged for debit card swipe fees (for further insight and details about this amendment, please see our article from May 27, 2010 "Senate Vote to Curb Swipe Fees Passes"). We were extremely apprehensive of this amendment right from the very beginning, and feared that if passed, consumers would ultimately be the ones to suffer. We already saw customers in Australia suffer from similar legislation, as customers not only saw no drops in prices, but other fees were added, costing consumers more. We also know that businesses don't like to lose revenue, and if forced, they will find other ways to recoup that lost revenue.



Consumers Target as Banks Try to Recoup Lost Revenue

Just as we expected, as a direct result of the Durbin amendment, consumers’ wallets were targeted by banks as the source to recover lost revenue from their merchant customers. It started with the end of free checking accounts by some banks. Then came increased ATM fees, and even some online transaction fees. This all set the table for the debit card fee "test programs". In February of this year, Chase started a pilot program in Wisconsin and Georgia. . And in March , Chase ran another pilot program in Texas and Illinois that charged $4-$5 ATM fees for each customer transactions. Wells Fargo planned to implement a $3 monthly fee to debit card transactions as well starting November 15th.

Due in large part to a successful online petition which received over 300,000 signature (started on change.org by Molly Katchpole of Washington, DC) against Bank of America's debit card fee, Bank of America has recently decided to drop its debit card fee plans. Shortly after, Wells Fargo and Chase followed suit, also deciding to drop their debit card fee plans.



So is This the End of Egregious Fees from the Banks?

In a word, no. If lawmakers continue to get involved in consumer transactions and private enterprise, through regulatory efforts, business will ALWAYS respond, as they are meant to do. After the success of the Durbin amendment to curb debit card swipe fees, there have been grumblings that another swipe fee amendment, this time attacking credit card swipe fees, could be in the works next. While banks will probably not try to implement a debit card purchase fee again, they'll most likely come up with some other fee to hit consumers with -- and the next time they may not be so willing to bow to public pressure.



How Can You Protect Yourself in the Future?

Read, read, read! Make sure to stay educated and up to date on the issues in the news.
Always make sure to read everything (especially the fine print) of any documentation sent to you by the bank -- there may be changes in the terms that could adversely affect you financially.

Think about switching to a smaller bank or credit union -- Since smaller, local banks have a tight-knit group of customers, and credit unions are not-for-profit and answer only to its members, and not to stockholders, they are much more likely to provide better customer service, and in many cases, better interest rates and/or lower or no fees on similar transactions you would do with a large bank.

So while you can consider the banks rescinding their plans for debit card fees a win for consumers, it doesn't mean consumers are out of the woods just yet. When banks lose money they get very creative in ways to recoup that lost revenue, and lately those plans were targeted at the consumer. While said jokingly, last week on an episode of the Colbert Report, Stephen Colbert stated in his intro: "Bank of America will drop its $5 debit card fee. Of course that comes with a $6 fee removal fee." While said in jest, many times in comedy what makes something truly funny is the hint of truth that's buried within.

More information can be found online at http://www.TheCrediteer.com

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