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Bank of America to charge monthly fee to debit card users
- rednaught 15y agoThey are not alone. I got word from one of my banks, Regions, that they too are implementing a similar charge. Bank Simple...we're ready for you now.
- mattezell 15y agoI got the same notice. I will be using my regions account to draft checks to pay off my highest rewarding credit card now.
- learc83 15y agoJust read in the article that the fed lowered maximum interchange fees. Has this translated to lower fees from payment processors for anyone?
- dangrossman 15y agoIt will for me since my account is priced in terms of "interchange + x%". Whenever interchange changes so do my fees. From what I've read so far, this will actually lead to an increase in my fees beginning in October, not a decrease. Visa will raise the interchange to the new maximum federally allowed value for some card types where they were previously charging less than this.
- untog 15y agoI think the thing that really annoys me about these kind of moves is that they're clearly targeting the less fortunate out there. If I want to avoid the $5 that's easy- I'll just switch to my credit card. But people who don't have enough credit to get a credit card now get punished twice. I read a fascinating passage in The Big Short (an excellent book on the financial crisis by Michael Lewis) that told the story of a top banking exec boasting about the amount of money they made on "Free Checking" accounts. Far more than they made on the accounts they charged for, because the "free" accounts came with dozens of catches and fines that ended up costing the customer more. What a foul way of doing business.
- AretNCarlsen 15y agoThis particular situation is more nuanced than the usual profit-from-the-poor story. Every bank and credit union receives these fees, and in the case of not-for-profit credit unions, the interchange fees truly support[ed] "free checking" accounts. Whereas merchants can lower their prices to pass the money back to the consumers (but won't), banks, conversely, have nowhere to recoup their losses except to charge the debit card users. I would rather see an honest fee like this than watch as overdraft penalties are raised to cover the lost revenue.
- deleted 15y ago[deleted]
- tzs 15y agoSwitching to the credit might not help. Some merchants charge more for credit card purchases (to cover the transaction fees). Well, technically they gave a cash discount to people not using credit cards because credit card association rules prohibited charging more than the advertised price to credit card users, but the net effect was the same. And now, due to the Wall Street Reform and Consumer Protection Act 2010, credit card associations are no longer allowed to have that control, so merchants can instead advertise the cash price and add a surcharge for credit cards (ARCO just recently started taking credit cards, and that is what they are doing). Furthermore, merchants can now charge extra to people using rewards cards. A lot of people don't realize this, but when you use a card that give cash back, or mileage, or points or whatever, the bank and credit card company do not pay for those rewards. They charge an extra 0.97% of the transaction amount to the merchant to cover the rewards.
- bilbo0s 15y agoThere is actually something more fundamentally troubling about this new fee ... it drives Americans to use more credit. It was pointed out to me recently that this tendency towards credit that is really 'built-in' to the rules in our society, would probably end up doing us in one day. Sometimes you don't even think about it. I recall once, shortly after the onset of the financial unpleasantness that began in 2008, I was at an airport trying to rent a car. I thought, "Hey...I'd better start practicing what I preach!" So I whipped out a simple debit card, with more money behind it than the value of the car I was renting. "Nope...we don't accept debit...only credit". I thought, "That's a little strange...no wonder the financial system is taking a crap." I didn't have a lot of time, so I just did the credit card thing. Point is, there are a large number of places out there that will not allow you to do business with them unless you are willing to go into debt, for however brief a period of time. When you consider the size of the US and the number of transactions being made every day...that's a little concerning.
- navyrain 15y agoI fail to see why anyone selects a big bank like BofA/WellsFargo/Chase for their personal accounts, when they are known to have a plethora of fees and dubious ethics, and there are almost always better options in regional credit unions. What am I missing?
- untog 15y agoATM locations, mostly. Chase has an ATM on every street corner in NYC (OK, an exaggeration, but only just). I know plenty of credit unions refund a certain number of ATM fees, but you can't do thinks like check deposits at them any more.
- cpeterso 15y agoSome banks and credit unions are adding "online checking depositing": you upload a photo of the check to their website. They OCR the photo and process the check. No signature endorsement necessary. Also, a good way to avoid ATM fees is to get "cash back" when using a debit card at the grocery store.
- pyre 15y agoMight not be the case anymore, but I remember hearing in the late 90's that some banks would charge you fees for getting "cash back" with your debit card at a merchant. This is probably bank-dependent though.
- InclinedPlane 15y agoThere's nothing special about getting "cash back" from a grocery store, there aren't any special fees associated with it. You're just buying cash from the store, it would be no different than if it had a stack of individually barcoded $20 bills on the shelf that they charged $20 each for.
- mahyarm 15y agoThey put cash limits on the checks usually, which neuters the functionality. And you still can't deposit cash.
- RexRollman 15y agoObi Wan Kenobi thought Mos Eisley was a wretched hive of scum and villainy, but he obviously never visited a commercial bank.
- PStamatiou 15y agoDon't they already do this? If I don't have at least $1500 in my account each month I get charged. So I have this account I never use anymore save for some tiny charges, that I don't want to cancel due to credit score that has to have that much money in it at all times.
- jcampbell1 15y agoA checking account doesn't affect your credit score. If you have a line of credit (e.g. overdraft protection), that would be reported, but I can't imagine that would affect your credit score much as the limit on personal lines of credit are small (typically around $500). Cancel the account if you are not using it.
- PStamatiou 15y agoGood to know!
- seanalltogether 15y ago"The formula sets the cap at 21 cents, plus .05 percent of the transaction amount, plus another penny in certain cases, for fraud-control measures." I understand that running to the government for solutions is rarely a good thing, but in this case, shouldn't "digital currency transactions" be something that the federal government maintains as a free utility to society? Isn't something like this just as important as printing currency?
- refurb 15y agoHow do you maintain something as "free" when it costs money? Do you mean having no fees for the digital currency transactions and having the tax payer pick up the cost?
- RomP 15y agoTax payers have been paying for manufacturing of tangible currency for many centuries. Creating and supporting financial environments is one of the features of governments.
- chrischen 15y agoIt depends on whether or not there's still room for innovation in digital currency transactions. If there is room for innovation then the private sector should focus on it before everyone combines their effort on a consensus.
- patio11 15y agoSo you know cash has processing fees associated with it, right? Really. They're totally orthogonal to the cost of physically creating paper or metal currency, and they're mostly subsidized by merchants. Cash management is a hard problem. WalMart spends about 3 million every year moving pennies around -- that actual coin type. Every time a salon owner has to spend time driving to the bank or money leaves a cash register, that's just another cost incurred because the merchant accepted cash money as a payment type. Checks also have processing fees associated with them. They're mostly subsidized by banks. Credit cards have processing fees, paid for mostly by merchants. Merchants really want banks to subsidize their use of debit cards, like banks subsidize their use of checks. There is no such thing as free, there's just free-from-the-perspective-of-your-own-P&L-statement.
- natesm 15y agoWell, I'm switching (I don't have a credit card). What is a good alternative? I know everyone loves USAA, but none of my family has any relation to the military. BoA is "great" because it is everywhere, is there actually anything as wide spread in the (northeast) US?
- _delirium 15y agoThis page lists a few of the (dwindling) large-ish not-online-only banks that still have fee-free accounts: http://www.pfstuff.com/checking/ http://www.pfstuff.com/checking/ Chase is also semi-ok if you keep a decent amount of money lying around; it's fee-free with a $1500 minimum balance, or w/ direct deposit.
- bittermang 15y agoI don't even care about widespread. I'll take anybody with a descent website.
- subsection1h 15y agoWhat is a good alternative? Here is a list on FatWallet showing the "Best Nationally Available High APY Liquid Accounts": http://www.fatwallet.com/forums/finance/783099/ http://www.fatwallet.com/forums/finance/783099/ Alliant Credit Union is usually near the top of the list. My Alliant checking account has been my primary checking account for years. Not only is my Alliant checking account free, but I currently earn 1.10% APY with it: http://www.alliantcreditunion.org/depositsinvestments/checking/ http://www.alliantcreditunion.org/depositsinvestments/checki... Deposits can be made at tens of thousands of ATMs across the country: http://www.alliantcreditunion.org/about/atms/ http://www.alliantcreditunion.org/about/atms/ I also have my HSA at Alliant because they're usually near the top of the list of best HSA providers: http://www.fatwallet.com/forums/finance/542257/ http://www.fatwallet.com/forums/finance/542257/
- smhinsey 15y agoI don't think it's true of all of their products, such as insurance, but I believe the general public can sign up for USAA banking. This was true a few years ago when I was looking for a new bank, but I ended up going elsewhere for unrelated reasons.
- nhangen 15y agoBankSimple is rejoicing right now. I have a mortgage and 3 separate accounts with BoA, but they still treat me like a 2nd class customer. This could push me over the edge.
- mahyarm 15y agoIt really depends on the branch/employee. I've dealt with idiots, and really great retail bankers at BoA. The stanford mall branch is pretty good in Palo Alto.
- nhangen 15y agoI rarely go to the branch offices because it takes an hour to get through the line. Most of my experience is with over the phone help.
- poppysan 15y agoTime for the great BofA exodus of 2012...
- sixtofour 15y agoThey may lose a small but noticeable number of customers, but they'll gain those numbers back over time. Consumers are mostly frogs in gradually warming water, the difference being that many of us "frogs" don't have easy options for switching pots.
- erreon 15y agoI think BOFA and other major banks are hand feeding people to credit unions in droves. I went today and set up my account at RBFCU and I can't wait to get far away from BOFA. Both my parents and I were with them for 20+ years.
- codecaine 15y agofun fact: In Germany it's exactly the other way round at least for 99% of the banks. You will get a free debit card at every bank but you have to put down a considerable amount of money as prepayment for a credit card additionally to the yearly fees. If you want a Deutsche Bank credit card they will lock 1000 EUR before they issue it to you and you will pay around 60-100 EUR yearly.
- merijnv 15y agoI think this holds for significant parts of the non-US world. In the Netherlands (and for that matter any European country I've visited) credit cards seem extremely uncommon. I am one of two people in my circle of acquaintances who owns a credit card and I only use it for buying stuff on-line (when no other option is available). As I understand it you can also only get money from an ATM associated with your bank, making picking a bank an availability issue too. Here you can get money from an ATM not associated with your bank once every 24 hours, making ATM availability pretty much a non-issue.
- binaryorganic 15y agoQueue Bank Simple Invites.... now!
- SODaniel 15y agoGoodbye worst company in the US. Hello Credit Union!
- illumin8 15y agoWhat is truly ridiculous is that banks get a 3% merchant fee for every credit or debit transaction charged to their card. So, essentially, they are charging their customers for the very privilege of making money... And we wonder why the banks are failing... this is why! You don't charge your customers for the privilege of making money! I told my bank that I flat out refuse to use my debit card unless THEY PAY ME at least 1% of the merchant fee, seeing as they are getting 3%. Right now, I use a Fidelity Retirement Rewards Amex card for all of my purchases. I get 2% cash back on every purchase. For those merchants that don't accept Amex I use a Fidelity Retirement Rewards Visa, which pays 1.5% cash back on every purchase. I encourage everyone I know to do the same. The reality is that credit/debit card companies make a ridiculous amount of money in merchant fees (up to 3%). DEMAND that they share that profit with you.
- baddox 15y agoIs that true for debit transactions? I always thought that credit card purchases cost the retailer money, which went to the credit company and/or rewards programs and/or banks, but that debit transactions cost the retailer nothing but cost the bank.
- kgermino 15y agoDebit transactions do cost the merchants, just not nearly as much. I think it's on the order of a transaction fee + .5% for debit vs transaction fee +3-4% for credit.
- illumin8 15y agoRight, they are still making money off of every transaction. It seems ridiculous to discourage debit card use. They are just greedy and want to charge both customers and merchants for essentially being a middle man and adding little value to the transaction.
- steve-howard 15y agoApparently rewards cards incur an extra charge for the merchant. Which essentially means that that cash back comes right out of the merchant's pocket. I don't mind that at all, but it does mean that the bank isn't "sharing the profit with you." A debit card/check card/credit card substantially eases access to one's money (or money one doesn't have). So I think it's reasonable that they charge at least some fee for it, though if it turns out my BofA debit card is one of those that require it I will probably never use it again.
- Jarred 15y agoMaybe it's because I don't buy much stuff, but I never understood the point of using credit for small purchases like getting a cup of coffee. I don't understand why people would use cash for that either (unless the coffee shop only takes cash/ charges more for debit). The same goes for checks. Could someone explain it to me?
- ghaff 15y agoI don't use debit. Pay off the credit every month. Get rewards points for it. Just no reason to use an additional separate card.
- Rickasaurus 15y agoI have two cash reward cards and use one until I max out the points (%2) and switch to the other for the rest of the year. It's like a free $300 bucks a year :).
- InclinedPlane 15y agoI've had accounts at Bank of America for the better part of a decade, due to my employer they have been completely free. Just recently BofA sent me a letter detailing all the new monthly charges for my accounts, to the tune of an effective annual fee of $372. The irony is that I never use those accounts anymore, having switched to a vastly superior local credit union about a year and a half ago. Despite having pumped six figures in deposits through them more than once over the course of having them as a bank BofA never treated me any better than if I were some junkie or drug dealer, it was a breath of fresh air to move to a bank that didn't treat me as if I were nothing more than a cow to be milked for fees.
- Yevgeny 15y agoBanking has now officially become synonymous with desperation and lack of creativity. What was once saved for accountants in the backroom has splurged into the face of consumers. Once the "idea well" of ingenious ways to earn an extra-buck or two dries out big banks look to corporate tax-breaks. But what happens when supplementary hidden fees and costs just don't cut it? Apparently, this. Interestingly enough, BOA announced these plans with the concurrent release of "_% cash back on all debit card purchases"...coincidence?
- Rickasaurus 15y agoNo one seems to be adding: in a desperate attempt to avoid bankruptcy
- rshm 15y agoIts anyway the banks fug the customer. Either directly or indirectly using merchants.
- maeon3 15y agoGood thing we bailed these guys out...