Debit card fee announced for Wells Fargo customers
August 23, 2011
As expected, Wells Fargo will test out new monthly fees on debit cards tied to a checking account, announcing that its customers in five states will have to pay to purchase with that particular piece of plastic starting in October.
Wells Fargo will charge its customers $3 a month for using their debit cards for purchases or payments but not for ATM withdrawals. Not every checking account offered by Wells Fargo will carry the debit fee.
Banks use these tests to measure how many checking account customers they lose as a result of the new fees. Wells Fargo is testing its fee in Nevada, Oregon, New Mexico, Georgia and Washington. Chase has been testing a $3 monthly fee in Wisconsin.
Wells Fargo also announced it is ending its debit card rewards program.
The new fees are a result of the Dodd-Frank financial reform law, which ordered the Federal Reserve to cap the swipe fees merchants pay banks when you buy something with your debit card. The Fed capped those fees in June, cutting them in half, and banks have been casting about for ways to make up for the billions in lost revenues.
Although it looks now as if customers will have to pay the banks instead of the merchants, retailers said during the Dodd-Frank debate on swipe fees that capping those costs would allow them to pass their savings on to consumers. We'll see if that happens.
The new debit card fees come on the heels of new fees many banks are charging for checking accounts. Banks used to cover the costs of free checking through overdraft charges, credit card fees and other practices that have since been outlawed by Dodd-Frank.
Some banks are considering putting a cap on how much you can purchase with a debit card. This might get you to use your credit card instead, which would make banks happy because the Fed didn't cap the transaction fees banks charge merchants for credit purchases.