What can I do about new debit card fees?
October 04, 2011
Q: I have a supposedly-free checking account, but my bank just notified me that they were going to start charging me $3 a month for using my debit card. Is that normal? Is there anything I can do about it?
A: Unfortunately, fees on checking accounts are becoming more normal. However, monthly debit card fees are still the exception rather than the rule, so you should be able to avoid them.
Between business losses and recent regulations, banks are scrambling to recoup lost revenues and new expenses. This has led some banks to eliminate their free checking accounts or raise existing fees.
The monthly debit card fee is a new variety of fee that some banks have started imposing, at least on an experimental basis. This is in reaction to the Durbin amendment in last year's Dodd-Frank financial reform legislation. This amendment effectively limits what banks can charge retailers for processing debit card transactions. Often though, trying to micromanage bank revenues legislatively is like squeezing one end of a balloon--it will just swell up somewhere else. So, if banks are limited in what they can charge retailers for debit card transactions, they'll try to make it up by charging checking account customers a monthly debit card fee. Another common reaction has been for banks to eliminate debit card rewards programs.
The good news is that only a relative few banks have announced new debit card fees so far, so you have options. If you otherwise like your bank, your first step should be to call and complain about the fee. Depending on the extent of your relationship with the bank and the amount of latitude your local banker has, you may be able to get the fee waived. Otherwise, start shopping for a bank without debit card fees. You should find there are still plenty of those alternatives available.
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