It seems like the time of freely swiping your debit card is almost over. Bank of America Corp., one of the largest banks throughout the United States is planning to place a monthly fee on anyone who makes use of their debit card. They say that they need to do it in order to recoup the revenue it will lose because of the government regulations that will cap the amount they can charge for debit-card transactions.
Banks are estimated to lose about $6.6 billion in revenue due to federal limits on “swipe fees”. To offset this loss, banks have either withheld on debit rewards, added monthly fees on checking accounts, and raised the minimum balance requirement to avoid fees. Now, banks have come up with another solution to regain their losses.
Bank of America plans to charge $5 for every month of debit card usage. Other large banks such as JP Morgan Chase & Co. and Wells Fargo & Co. have been testing similar fees in some states. JP Morgan begun testing in a small market in Wisconsin since February while Sun Trust Banks have begun charging a $5 monthly fee for unlimited usage of their debit card since June.
While big banks seem to be following suit with Bank of America’s decision, the reaction of their customers haven’t yet been taken into account. Allison Miller, Bank of America customer in New Jersey said that she is most likely to switch banks because of the new fee. This reaction is expected in many of their consumers since no one likes to have extra fees being charged to them monthly. The question is, whether or not these customers will take the time and effort in switching banks.
The $5 fee that Bank of America plans to charge is higher than what other banks are willing to charge their customers. Other banks who have decided to follow on BofA’s decision are charging $3, or at most $4. It remains to be seen what consumers will say with regards to all this, but it is expected that they will be unhappy.