America, land of the fee. Because the Dodd-Frank Act is costing big banks swipe fee revenue, they're trying to pin the loss on consumers. But public outcry, and these tips, might save you from new fees on debit cards.
These days, we’ve sadly come to expect (if not accept) ridiculous fees. But a fee to use your own money – that’s insane, right?
Bank of America didn’t think so. About a month ago, they announced a new plan to charge consumers a $5 monthly fee to use a debit card, even if they use it once and swipe as “credit” instead of “debit.” Other big banks made similar proposals.
Why? In short, because one of their other fee schemes – “swipe fees” charged to retailers every time you use your debit card – got curbed by government regulations at an estimated cost to the banking industry of about $6.5 billion per year, according to The Wall Street Journal.
In the video below, Money Talks News founder Stacy Johnson looks at some ways to get around these debit fees. Check it out, and then read on for more.
As Stacy said, there’s no reason to put up with bad banking behavior. And because consumers and politicians are making some noise, Bank of America and others are planning to tweak or scrap this fee proposal, Forbes reported last week. SunTrust, which had already implemented a fee, is killing the debit fee and refunding it this week. But until the details are worked out everywhere, and in case your bank isn’t giving up, here’s how you might fix the fees…
- Ask for a waiver. You might already be eligible based on your bank’s policy – some drop the fee for those who have direct deposit, a minimum balance, use online banking, or hold multiple accounts. Find out the policy, and even if you aren’t exempt, ask anyway. It can’t hurt. (Until they start charging a fee for asking questions.)
- Use cash. The old-fashioned way is still a good one. There’s no fee or interest charge on paper money. It’s also harder to overspend with a limited number of bills in your wallet that you have to hand over. And since some small businesses don’t take plastic, cash is always handy. Just make sure you use ATMs from your bank so you don’t get hit with a fee there instead.
- Checks. While a little less convenient than cash, there’s still no charge to pay with these, even though they’re just the paper version of a debit card. Ordering checks isn’t free, of course, so it’s not the best choice for saving money.
- Try credit cards. Banks still get “swipe fees” with this option, but not from you – from the retailer. As long as you pay off your balance each month, this route is as cheap as cash and more convenient. And if you have a rewards card, you may even make a little back.
- Switch banks. If the debit card fee is simply the last straw, move on. Many smaller banks and credit unions aren’t charging debit fees (although they may have others). In fact, Tropical Financial Credit Union in South Florida is flirting with Bank of America malcontents by paying its customers to use debit cards – up to $5 per month. As Stacy mentioned, credit unions also have better rates on savings accounts and loans too. Check out 7 Steps to Switch to a Better Bank for a walk through the process of changing banks.
For-profit banking is a never-ending game of Whack-a-Mole – smack down one fee and you’ll soon see another rear its head. Keep the hammer handy and check out 5 Ways to Lower Your Banking Fees.