Monday, October 3, 2011

Debit Card Fees Coming Your Way

Since banks like Wells Fargo, Bank of America and Citibank are now strapped for cash because of all of the toxic loans they have made (and now hold) along with other increased costs of government regulation ... they are going to be raising their rates and one of the things they are doing is to slap you with a $5 a month fee for using your debit card!

That's an extra $60 a year just for the privilege of using your debit card which accesses the money in your savings or checking account when you use your card at a store or restaurant or purchase items online.

Now some people won't care - but it looks like a lot of people do care.
$60 could buy some groceries - or gas.

There's a movement afoot of people who are dumping their accounts in these banks and moving to credit unions or even just stopping the practice of using debit cards (and canceling them) and instead just going to ATM's and withdrawing money that they know they will need for their transactions.

With lots of people canceling their bank accounts with these big banks and pulling their money out - this move to put such a fee on debit transactions just might backfire - similar to what happened when Netflix instituted a $6 per month price increase a few months ago. Netflix is now experiencing some financial difficulty as a result.

The banks have put exemption requirements on these fees, as a way to entice you to keep money in their banks or hold a mortgage with them.

Zerohedge writes:
As for the exemption requirements, they will likely be the same as Bank of Countrywide Lynch's: either have a mortgage with the TBTF behemoth, or have $20k in a deposit account - both which will likely not be much of a help to 90%+ of the bank clients. The biggest problem is that suddenly at risk are $1.9 trillion in deposits - $1 trillion at BofA, $866 billion at Citi. While the financial crisis did little to dent the banks' deposit buffer, it will be highly ironic if it is an act of the banks themselves that begins the great bank run that resets it all.

And don't think for a moment that these fees won't be going up at some later point in time.

Some people are suggesting that now might be a good time to close the account you have in a mega bank like CITI, Bank of America, and Wells Fargo and move them to a local credit union.

Shop local.
Buy local.
Bank local.


gary said...

Actually, I think it's because of new government limits on the amount they can charge retailers or consumers for transactions, not toxic loans. It's like squeezing a baloon.

Judy Aron said...

Thanks Gary - I meant to add that in as well, and have edited my original sentence regarding that.

No worries though - eh?
When the banks start to fail guess who will be bailing them out?

Mike Cardace, Citi said...

Hi all, my name is Mike and I work for Citi. There's certainly a lot of chatter in social media channels about bank fees, and I want to clarify something. Citi will *not* be introducing a monthly charge associated with debit card usage. We've been clear about that. In the spirit of being transparent though, we have announced that some of our monthly fees/minimum balance requirements are increasing for our banking packages. However, I want to stress that we have tried to implement these fee changes in a way to continue to make it easy for customers to have them waived. That's why we think our options are better for customers than what some other banks are doing. For example, with our Basic Banking Package, to avoid the $10 monthly service fee, customers need only maintain $1,500 in average monthly balance between checking/savings or make at least one direct deposit and one online bill pay.

Let me knwo if anyone has comments/questions.

Mike Cardace, Citi

Anonymous said...

Debit cards are unwise. If someone gets your debit card and uses it to empty your account you are simply out of luck. If the same thing happened with a charge card the most you would be responsible for would be $50. I have two ATM cards and one is a debit as well. My credit union told me they could not give me an ATM that was not also a debit so I asked to speak to the supervisor. After considerable arguing they did indeed issue me a ATM card that cannot function as a debit card. I pay cash for everything with few exceptions. I have never even written a check for a retail purchase. I did write a check once to buy a car. Cash is king!

Anonymous said...

The dodd-frank honk the banks bill and dick turdbin durbin dem senator frm Illinois who added and ammendment to reduce fees banks can charge from 44 cents to 21 cents per transaction are responsible for this.

Judy Aron said...

Mike Candace - maybe you better tell the LA Times.. that's where the original story is from - they claim you are raising your fees and joining the other mega banks with debit card fees.

I have heard it other places too - and from people who work at Wells Fargo.

You are all raising fees.

Anonymous said...

Congress created this by passing the legislation. I resent Congress now lambasting them.

Government got involved and made it worse. Like they always do.