Saturday, October 29, 2011

Bank Fees Charged to Consumers (Video) *Big Banks offend customers with debit card fee*

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Big Bank Revenues include loan interest, investment interest, and fees

Big Bank Fees Bank of America, with $2.2 trillion in total assets and earnings of $6.23 billion in the latest quarter, offended consumers with the announcement of a $5 debit card fee. Now Bank of America and other banks are maneuvering to mitigate this public relations disaster. Bank of America is now saying the debit card fee will be waived if the customer 1) uses direct deposit on their paycheck, 2) use a Bank of America credit card, and 3) maintain a minimum (undisclosed, but probably $1,000+) balance. SunTrust Banks and Regions Financial have also announced debit card fees. Some banks have explicitly stated they will not charge a debit card fee, including U.S. Bancorp, PNC Financial Services, Citibank, and KeyCorp. JPMorgan Chase has announced they are abandoning their debit card fee plan.

Watch Out for Stealth Fees Debit card fees aren't the only way a customer pays. Other fees are for receiving a paper statement, for using a teller, for not using your account enough, and for not maintaining a minimum balance.

Dodd–Frank Wall Street Reform and Consumer Protection Act This Act limited the swipe fees banks could charge merchants for accepting debit cards. The Federal Reserve set the new fee at a maximum of $0.24 per transaction, down from an estimated average of $0.44. The lower merchant fee, and lower bank revenues, went into effect in October 2011. Richard Hunt, President of the Consumers Bankers Association, maintains this regulation will cost the banking industry $8 billion and it is "the consumer who will be the big loser". Other analysts have estimated this reduction in fee income at less than $7 billion per year. In addition, limitations were placed on some overdraft fees, but this is controversial and litigation continues in the courts.

Big Bank Alternatives Local community banks and credit unions may not charge as many fees or as high a fees as the larger banks. Consider the services you use at your existing financial institution.. Ask for a fee schedule and comparison-shop prospective financial institutions. Some local community banks and credit unions do in fact charge high fees. Be careful with overdraft protection and courtesy pay programs offered by any bank or credit union. A fee-based plan is very expensive to the consumer, compared to an interest-based plan. ATM fees can be potentially expensive at any bank or credit union and may include a balance inquiry fee.

Some Big Banks Back Down From Debit Card Fee Bank of America triggered outrage among customers last month when it announced plans to impose a $5 monthly fee next year for using a debit card. Even President Barack Obama weighed in, saying banks shouldn't take advantage of their customers. But other big banks are not following in the steps of the nation's No. 2 bank. And now Bank of America itself seems to be wavering in its resolve. Bank of America appears to be responding to criticism over their plan to implement a $5 monthly debit card fee. NBC's Tom Costello has more.

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