October 7th, 2011
The $5 Debit Card Fee: You Talk the Talk, But Will You Walk the Walk?
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Ninety-three percent of consumers said they would not pay a monthly fee to use a debit card, according to a recent poll by the Wall Street Journal. Less than 3 percent said they will pay the fee.
The outrage against the $5 Bank of America debit card fee is being voiced across media, from angrily tweeting consumers to Obama himself. Complaining about the fees might be cathartic, but it’s not constructive. Once the media heat cools and BofA customers get their bill statement next month, I wonder how many customers who talk the anti-bank talk will actually walk the walk.
Why You Won’t Switch
Banks are counting on consumers to be too lazy, indifferent, or comfortable to switch banks.
While you may gripe about the $5 fee, you may also have a checking account, savings account, credit card and mortgage at the bank. You may have already signed up for online and mobile banking, automated bill pay and set up direct deposits and transfers. All of these financial products and services have a sticky element, and banks are counting on the fact that it’ll make it harder for you to switch. It’s more painful to move all of your banking than to pay $5 a month.
Banks are also counting on desensitization to set in, in which consumers get used to the complaining and pay anyway. Consider the history of ATM fees. A decade ago it cost less than a $1 to use an ATM outside of your bank’s network, and today it costs anywhere between $3 and$5. Even though consumers and Congress alike cried foul before, we kept using ATMs and paying the fee.
It could be the same story with debit card fees—sure, we don’t like them, but we’ll pay regardless.
Why You Should Consider Switching
This $5 debit fee is the final straw for many consumers. Here are just a few reasons to consider switching.
- You can switch to credit cards, and earn cash back rather than fork out a cash fee.
- Using a credit card also provides better security measures against identity theft and fraud than debit cards.
- You’ve been dying to test out new mobile payment technology.
- You can finally look into the local credit union, which you’ve heard rave reviews about.
- You’ve been meaning to switch to online banks for awhile, since you almost never need to enter a bank branch anyway.
- Both credit unions and online banks are actually offering debit card rewards in the midst of big banks’ fee announcement (brilliant marketing move).
- Banks have a lot of lost revenue to recoup. Fees on other banking services are likely on the way.
- You refuse to pay an annual fee of $60 just to use your own money.
The hard truth to swallow is that banks will continue to add fees to recoup losses, and it looks like the end of free and low-cost banking . Banks hold your money and keep it secure, and this $5 fee is the new cost of doing business.
For many, $5 is a small price to pay to keep their banking in one place. Others will walk out and switch to a big bank alternative.
What I ask is that you make a conscious choice about it. Don’t gripe about the Bank of America fee, get lazy, and end up paying $60 a year much to your own dismay. By all means, stay and pay the fee if it’s worth it, and maximize your banking services and resources. If you want to switch, make sure you do your research, read reviews on credit unions and banks, and chose the right one for you.
But for goodness sake, if you’re going to talk the talk, make sure you walk the walk right out of your big bank and into financial services better suited to your financial needs.
Keep up the Karma,
Justine Rivero, Credit Advisor