Hold onto your wallet – “swipe fees” coming to a bank near you

October 3, 2011

Beginning this month many of you will be charged a fee to use your own money.  Here’s what happened:

Last year’s Dodd-Frank financial regulation overhaul included a provision which caps the fee banks can charge merchants when you use your debit card for a purchase.  Instead of being able to collect 44 cents from merchants banks will only be allowed to collect 24 cents.  Losing that revenue some say will cost banks $6.6 billion in losses.

How do the banks plan on making up the difference? You guessed it, hand over your wallet.

New fees called “swipe fees” will be charged to your account beginning October 1st for some and nationwide early next year for those who have accounts with Bank of America.

“The economics of offering a debit card have changed with recent regulations,” a spokeswoman for Bank of America told the Wall Street Journal.

WSJ reported that Bank of America will:

  • Start the new fee will in early 2012 for a variety of consumer checking accounts
  • Will apply the monthly fee to debit cards used for purchases (which is the purpose of the card)
  • Will NOT apply the fee to ATM withdrawals
  • Will NOT apply the fee for simply “holding” a card
  • Will NOT apply the fee to certain premium accounts

Those who have accounts with other banks are not immune to “the economics” of offering a debit card. Some banks are already testing how this charge will affect their customers.  They are betting that people won’t change banks because it is too cumbersome.  Swipe fee limits were finalized by the Federal Reserve Board over the summer.

So let’s get this right; I have my money in their bank for which they are paying ridiculously low interest rates and now I want to spend my money held in their bank and they want to charge me for the privilege of spending my own money?  I say shame, shame on Bank of America. Don’t take it out on the consumer for the Federal Government’s action.

The Dodd – Frank legislation is regressive and hurts people – instead of helping them.

Why not limit or scale back reward programs, or raise the minimum balance requirements?  There are other banks looking into these alternatives.

The new rules apply to banks with $10 billion or more in assets.  The likelihood that more banks will seize this opportunity to recoup losses from the people who keep them in business is high.  However, I for one will not let that happen to me or my family.

I will be withdrawing my money from Bank of America. Instead, I will invest in another bank, one that doesn’t charge me for using my own money.