- (Photo:REUTERS/Fred Prouser)
Bank of America has announced plans to start charging customers a $5 monthly fee for transactions in which a debit card is used. The policy, said to be a result of legislation known as the "Durbin Amendment," is not unique to BofA, as several other financial institutions plan to follow suit with similar programs.
Besides Bank of America, several other national and top-tier local banks plan to either follow suit or to boost already existing charges. Where does your bank stand, and can you expect to be hit with additional fees?
According to The Wall Street Journal, Wells Fargo will start charging a $3 fee for some customers in Nevada, Washington, Oregon, New Mexico and Georgia who use debit cards at the register. That program is expected to take effect on Oct. 14.
The New York Times reports that JPMorgan Chase has been testing a program similar to Wells Fargo's, also charging $3 per month for account holders in select states.
Regions Financial, based in Alabama, also plans to start charging $4 monthly for debit card transactions, while SunTrust, based in Georgia, will follow suit with a $5 monthly fee, the paper reports.
Citibank, on the other hand, has said it has no plans to start charging on a monthly basis for debit card use. A representative told the Times: "We have talked to customers and they have made it abundantly clear that 'if you charge me to use my debit card, I would find that very irritating.’"
The Times also reports that HSBC has increased its ATM fee from $2 to $2.50, while TD Bank charges customers $2 to use ATMs outside of its network.
Bank of America's new debit card policy, which does not affect ATM transactions, is expected to be rolled out in stages starting in 2012, reports The Street.
As news of Bank of America's debit card policy started to spread Friday morning, much of the reaction from bank card holders were of frustration, with threats to drop the financial institution all together.
The Durbin Amendment, referring to Sen. Dick Durbin, is legislation that puts limits on how much banks can charge merchants for every swipe a customer takes with their debit cards. To compensate for that loss in revenue, institutions, such as Bank of America, are turning to customers to help fill the gap.
Durbin, who sponsored the provision as part of the nation's financial overhaul, claims small businesses will benefit the most form the new policy, which goes into effect this weekend.
The Democratic senator from Illinois issued a statement on his website Thursday, saying, "Small business and merchants will benefit from fee relief and consumers will benefit from lower prices." He also chided Bank of America, adding, "After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers. It’s overt, unfair and I hope their customers have the final say."
Bank of America's website was down Friday afternoon with the following message: "Home Page Temporarily Unavailable." It was not immediately clear if the crash of BofA's site was related to its new policy for debit card holders.