Coming Soon: Monthly Fees for Debit Cards

debit card monthly usage fees

Yes, it’s true. Banks have started testing to see if they can charge you a fee every month you use your debit card. This change follows a recent ruling by the Federal Reserve concerning the swipe fee – the fee banks charge retailers each time you make a purchase with your debit card.

On June 29, 2011, the Fed lowered the amount banks could charge for each debit card purchase. This was great news for retailers since it reduced their costs. But, the ruling was made at the expense of the banks. So, it didn’t take long for them to start making changes too.

From the New York Times article, For Consumers, Little to Cheer in New Cap on Debit Fees, by Ann Carrns.

The Federal Reserve on Wednesday issued its long-awaited rule on the cap on “swipe” fees that banks charge retailers for processing debit card purchases. And it appears that all the banks’ complaints about the proposed cap paid off.

The Fed had originally proposed limiting the fees to 12 cents a transaction, a steep drop from the current average swipe fee of about 44 cents. But the Fed said Wednesday that it would set the base cap at 21 cents. Plus, banks can add extra cents, based on the amount of the transaction, to cover fraud costs.

Now, the banks are responding to the Fed’s ruling. Since they can only charge retailers 21 cents (instead of the original 44 cents) when you use your debit card, they found a way to make up the difference. Every month you make a purchase with your debit card, they will charge you a monthly fee.

Wells Fargo, SunTrust Bank, Regions Bank, and JPMorgan Chase are all testing debit card activity fees – charging between $3-$5 a month. If they don’t get too much backlash from consumers, you can bet they’ll roll-out this program nationwide.

Ann Carrns from the New York Times shares the details of these tests in, Banks Test Monthly Fees for Debit Cards.

Wells Fargo, for instance, is notifying customers this month that beginning in October, the bank will test a debit card “activity fee” of $3 a month when a customer makes a purchase or payment with a debit card linked to a personal or business checking account. (ATM transactions won’t trigger the fee.)

The test will affect accounts opened in five states: Oregon, New Mexico, Nevada, Georgia and Washington.
SunTrust Bank recently implemented a $5-a-month fee for debit card purchases for holders of its basic Everyday Checking account and will add the fee to its student checking account next spring. In any given month, if the customer uses the debit card to make a purchase — either using a signature or a PIN — the bank will charge a single $5 fee. The fee doesn’t apply to use of the card for ATM transactions.
Regions Bank, meanwhile, now charges a $4 monthly fee for debit card purchases for holders of its basic LifeGreen Checking account and its student checking account, according to the bank’s Web site. (The fee doesn’t apply to ATM transactions and is waived if you don’t make any purchases with the card.)

JPMorgan Chase is testing a $3 monthly fee for a debit card with a basic checking account in northern Wisconsin. (Customers there have three other accounts to choose from that provide a debit card with no fee, according to a bank spokesman.)

Since the banks have to comply with the lower Fed mandated rates by October 1st, 2011, they will most likely implement their new fees soon.

The big question is: Will you stop using your debit card if your bank charges you a monthly usage fee?

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