Consumers Pay Dearly for Bank Debit Card Losses
America’s big retail banks such as Wells Fargo, Chase and Bank of America may have abandoned plans to impose monthly debit card fees upon consumers, but they are busy issuing other types of fees to recoup revenue losses.
Although many big banks yielded to the outpouring of customer outrage that came in response to their proposed plans to instate a monthly charge for non-ATM debit card usage by not proceeding with that particular fee, the fact of the matter remains that banks are still out billions of dollars a year as a result of recent regulations that capped the amount they can collect from merchants for each debit card payment transaction. This means that banks now have to find other ways to recoup some of their roughly $12 billion in annual losses, and they are doing so by charging consumers fees in a myriad of other areas.
The average amount of money it costs a bank to maintain one individual’s checking account is between $200 and $300. Thanks to regulations restricting the amount of overdraft fees they can collect from accountholders combined with the fact that many Americans simply have less money these days, banks are not making as much of a profit as they used to, especially on customers that maintain low balances. As a result, a lot of banks are eliminating free checking options or else making it more challenging for consumers to avoid fees on their accounts by placing new restrictions on accounts such as requiring higher minimum balances. Other revenue-generating tactics include charging fees for monthly account maintenance or raising fees that are already in existence.
Banks are also decreasing the interest rates they pay out on savings accounts. Since the beginning of the year, the average interest rate on deposits has dropped from 0.8% to .74%, according to data released by Market Rates Insight. Throughout the industry, that fraction of a percent makes a huge impact, resulting in approximately $1.5 billion in monthly savings for banks.
Essentially, banks are looking to extract about $15 – $20 from each of their depositors on a monthly basis to make up for the revenue they have lost due to new financial regulations. Some of the ways in which a few of the nation’s bigger banks are attempting to do so:
- Citibank increased the monthly fee attached to their basic accounts to $10, up from $8.
- U.S. Bank is now charging customers a fee of 50 cents for any checks deposited using a mobile phone.
- Chase now charges a higher fee of $12 a month for basic checking accounts.
- Bank of America is charging a $5 replacement fee for all lost debit cards. Rush delivery costs $20.
Consumers should be reading all correspondence they receive from their bank to stay informed about any fee changes.