Thanks to a new rule that requires banks to charge retailers a lower fee for debit card transactions, you will probably see more fees on your bank statements. It’s a result of the Dodd-Frank Act for consumer protection.
Beginning October 1, banks charge 24 cents instead of the average 44 cents per transaction—the fee a retailer pays to the bank every time a debit card is swiped for a consumer’s purchase. Plus, other regulatory changes have limited overdraft fees recently. Since banks won’t likely want these major cuts to eat into their profits, the end result will be higher costs to you, the consumer.
Here’s what to watch for:
• Your “free” checking account might change its free status, or you might have to meet different requirements. According to Bankrate.com, free checking accounts are slowly disappearing and account fees are on the increase. Only about 45% of non-interest bearing checking accounts are free now, compared to 65% in 2010 and 76% in 2009. A Bankrate.com survey shows average monthly fees for non-interest checking accounts are $4.37, which is 75% more from a year ago. Meanwhile, the average overdraft fee is about $31, also more than last year.
• Some debit cards may cut rewards programs. Some examples? SunTrust, Wells Fargo, and Chase Bank.
• Some banks may start charging you to use your debit card or even to have a debit card. Bank of America recently announced it will have a transaction fee, for example.
Since more consumers use debit cards than credit cards, this is a big deal. The Federal Reserve estimates that banks could lose about 40% in revenue from debit card fees.
But debit cards aren’t going away. They’re too convenient. Will you change your habits when it comes to paying with plastic if you have to pay a fee?