October 7th, 2011

The $5 Debit Card Fee: You Talk the Talk, But Will You Walk the Walk?

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debit card

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.

  1. You can switch to credit cards, and earn cash back rather than fork out a cash fee.
  2. Using a credit card also provides better security measures against identity theft and fraud than debit cards.
  3. You’ve been dying to test out new mobile payment technology.
  4. You can finally look into the local credit union, which you’ve heard rave reviews about.
  5. You’ve been meaning to switch to online banks for awhile, since you almost never need to enter a bank branch anyway.
  6. Both credit unions and online banks are actually offering debit card rewards in the midst of big banks’ fee announcement (brilliant marketing move).
  7. Banks have a lot of lost revenue to recoup. Fees on other banking services are likely on the way.
  8. 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

13 Comments

  1. We switched from BoA a few years ago when the fees where getting out of hand and my card had been hacked for the 3rd time- and honestly I don’t know why anybody is still doing business with them! We moved to a credit union – refinanced our Car at 2.99% and have a high yield checking without a minimum balance as long as one of us has Direct Deposit. The yield is 2.75%. All my ATM Fees get reimbursed and if I ever drop the ball and pay a bill with the wrong account they don’t even blink and reverse the fees! They also know my name and my children’s names which is more than I can say about BoA!

    Tina at 5:18 pm on October 7, 2011
  2. I won’t be paying $5 a month to use my card, but I won’t be leaving Bank of America. The $5 is only IF you do a DEBIT (with your PIN number) transaction and it’s a flat fee for any month in which you DO USE the DEBIT feature. Credit transactions (same card) incur no fee. Some bank cards don’t even offer a DEBIT feature (credit only) on their check cards and some others don’t offer credit feature (debit only). I have the option to use my card in either manner if I like. Am I happy about the fee? No, but it’s not going to be a drastic change. The article above suggested using a credit card instead. You can keep your BofA card and run it as credit in all the same establishments. This is NOT a $5 monthly fee for HAVING A DEBIT card, this is a $5 fee in the months when you RUN YOUR BofA CARD as DEBIT.

    Sean at 5:22 pm on October 7, 2011
  3. Sean, You had better get better clarity on that, because I talked to numerous reps that said you get charged the fee whether you use debit or credit (Pin or run as credit). I’d hate to see you get that $5 charge next month because you mistakenly believed you could run your pin only.

    I’ve already switched. These banks just keep getting more greedy but they won’t be doing it at a cost to me. Switch to a Credit Union!!!!!

    Laura at 6:04 pm on October 7, 2011
  4. Sean, a lot of people lost their jobs to get to the debit card stage of the banking game. We use to carry and count money all the time. Imagine if you had to go and get a person to give you money before you had a transaction. So now it’s automated, meaning one company charges the bank far less then they would have paid to use your money. So now will you pay them for the service of paying less to use your money?

    Kelin at 8:25 pm on October 7, 2011
  5. Sean is incorrect. I spoke with BofA specifically about the debit/credit option. The $5 fee applies if the debit card is used to make ANY purchase. “Any purchase” means anytime you swipe your card anywhere other than an ATM. You will incur the $5 fee if you use your debit card online or at any point-of-sale terminal, whether you choose the “debit” or “credit” option.

    If you want to stay with BofA and avoid the fee, you’ll have to use/get a credit card.

    Jeffry Pilcher | The Financial Brand at 7:22 am on October 8, 2011
  6. I have been with a credit union for over 15 years. I can’t see how people are still with these big banks that nickle and dime them into the poor house. You have the power and you’re giving it away. If you show them that you are willing to walk away and not have money STOLEN from you then they will change. As long as they know you going to put up with the fees they are going to create more of them.

    Nathaniel at 10:04 am on October 9, 2011
  7. I have generally preferred to put everything on my credit card and then pay it off (in full) at the end of the month, so I very rarely use debit. This new fee will just ensure that I make a point of NEVER using my BoA debit card. I see no reason to pay them for the privilege of spending my own money.

    Penny at 5:19 pm on October 9, 2011
  8. Check credit unions in your area. I use Marine Federal in Jacksonville NC. Free interest bearing checking account with a direct deposit. Free ATM and up to $25 a month reimbursment when I have to use an ATM from someone else. I also have a direct deposit at BofA with free interest bearing checking. I use BofA for the free safety deposit box. Also I have a personal banker. You should always have a personal banker to smooth out any problems you encounter.

    Lawrence N. Grossman at 4:21 am on October 10, 2012

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