PARKERSBURG - Bank of America has announced early next year it will begin charging debit card users a $5-a-month fee to pay for purchases. A sampling of local banks show they don't charge such a fee and don't anticipate doing so.
The move by Bank of America comes as the debit cards increasingly replace cash and banks look for ways to offset loss of revenue from a new rule that will limit how much they can collect from merchants. Several of the larger banks in the nation have recently introduced or started instituting these debit card fees.
Bank of America's announcement carries added weight because it is the largest U.S. bank by deposits. Bank of America Corporation has stated the fee will be effective in phases starting in select states early in 2012. The fee is for purchases, not Automatic Teller Machine usage.
Sheila Mann, bookkeeper with Community Bank, said Community does not charge such a fee and has no intention at the present time of doing so.
The Bank of America fee is a flat monthly charge for unlimited transactions, and the fee is not charged on ATM usage.
"We do not charge any monthly fees on debit cards and have no plans, at this time, to do so," said Cindy Bullock, head of marketing and training director for United Bank in Parkersburg.
A Peoples Bank spokesman said that bank also currently does not charge for debit card purchases.
Peoples Bank does have a maintenance fee on its debit card accounts, but there are options such as accounts for seniors/students and if you use the card a specified number of times a month and other options in which there is no maintenance fee.
A recent study found the total average cost for using an ATM rose to $3.81, from $3.74, the year before. The average overdraft fee went to $30.83, from $30.47.
The changes announced by Bank of America come ahead of a regulation that went into effect this month, which capped fees banks could collect from merchants whenever customers swipe their debit cards. Those fees generated $19 billion in revenue for banks in 2009, according to the Nilson Report, which tracks the payments industry. There is no similar cap on the merchant fees banks collect when customers use their credit cards.
This summer, an Associated Press-GfK poll found two-thirds of consumers use debit cards more frequently than credit cards. But when asked how they would react if they were charged a $3 monthly debit card fee, 61 percent said they'd find another way to pay.
Some House Democrats have asked Attorney General Eric Holder to investigate whether banks and their trade associations are violating anti-trust laws with the new debit card fees.
Banks which have announced they will institute the fee say they are trying to recoup losses from the new rule enacted as part of regulatory overhaul, an amendment to the Wall Street bill, known as the Dodd Frank Act which capped the amount banks can charge merchants for debit card swipes at an average of 24 cents per transaction. The cap, determined by the Federal Reserve, went into effect Oct. 1.
(The Associated Press contributed to this story.)
