Banks are ready to start charging debit card use fees when it comes to everyday swipes. Now with the debit card use fees our pocketbooks could get even smaller!
Wells Fargo (NYSE: WFC) will impose a $3 debit card fee in every month that customers use their debit cards for purchases starting October 14, according to the notification letter sent to customers in the following states: Georgia, New Mexico, Nevada, Oregon, and Washington.
Other banks such as JPMorgan Chase have been testing such moves to offset losses resulting from restrictions on what they can charge retailers for debit card purchases.
Chase has also pondered the idea of capping the amount per debit-card purchase at $50 to $100, along with other major institutions such as Citigroup and Bank of America, the New York Post reported.
This is creating a stir among finance media (and of course the customers) since new debit card fees, if applied to all states, would impact over 40 million customers at Wells Fargo, the second largest issuer of debit cards in the United States according to an April 2011 Nilson Report.
MyBankTracker.com reports that customers will be charged the debit card fee for each month a purchase is made regardless of whether “debit” or “credit” is selected. Any transaction conducted at an ATM will not trigger this fee, according to a Wells Fargo representative.
This sounds a lot like the airline industry when “revenue generators” are basically keywords for extra fees that executives have to come up with to keep a respectable profit margin. Just as
airlines are now charging fees for luggage, food and drink, and other aspects of the travel process that used to be free, banks are learning that coming up with a similar strategy would work for them, even if customers will obviously not be thrilled.
Wells Fargo estimated it would save more than $200 million in losses with the $3 debit card fee.
According to Mybanktracker.com, Wells Fargo Chairman and CEO John Stumpf outlined other possible revenue generators at a recent conference, including raising minimum account balances and slapping on a fee for even the right to have a debit card.
Remember when many banks advertised a “totally free” checking account? I do, and something tells me that the future of our bank accounts isn’t going to be pretty.
If this happens to my bank, I may just start paying as much as I can in cash, out of spite.
What can we do to put a stop to this nonsense?
With the airlines, other than flying the one or two airlines that still do not charge for checked baggage, there’s not much we can do to avoid it. I have a credit card for an airline which gives me the “perk” of free checked bags for my flights, but, of course, all the credit card fees from the credit card usage go to my bank! just can’t win!
Let’s hope the “testing” certain banks are doing with the new debit card fees is only temporary. If it becomes permanent, feel free to go to your local bank and raise hell. If enough people do it, who
knows? Maybe they’ll figure out another way to make money that doesn’t involve annoying extra service fees.
What would you do if you found out your bank started charging you a debit card fee? Would you go to a different bank or just suck it up?
Please feel free to leave a comment with what you would do!
August 17, 2011 at 5:57
I will get in line to change banks and pay as many bills as possible by cash!
August 19, 2011 at 5:57
Guess i will be closing all three of my accounts with them changing banks if this happens.
August 22, 2011 at 5:57
I’ve already told them via their website that I would close my accounts and look to a ‘local’ financial institution. I live in Florida – an abundance of ‘non-corporate’ banks wanting business exists here.
August 30, 2011 at 5:57
Blame elected officials and, in particular, the Durbin Amendment. We consumers have enjoyed debit cards for virtually free. The processing and forgery losses were borne by the retailer and the bank. Up until the Durbin Amendment, the banks charged a fee, made a profit, and covered forgery losses. The retailer paid a fee,received guaranteed payment, and profited on the sale. Bank profits supported “free checking” and “rewards” programs that are also going the way of the dinosaur. The Durbin amendment through price-fixing virtually eliminated the fee paid by the retailer. Most unbiased financial reporters knew long ago that banks would either have to raise fees, reduce service, or some combinatin of both. I don’t like it but I’m mad at the big box stores,that were the only winners in this process,for padding their profits and particularly the Congressman that carried their mail!
September 10, 2011 at 5:57
The last comment makes a lot of sense, everyone has to make a profit or they would go out of business. Then the government would take more taxes to “bail them out” so one way or another we will have to pay.