Serious Charges: The Relentless Banking Money-Grab

Banks’ retreat from the debit-card fees that they began to impose last summer was a victory for consumers, but the war over your money isn’t over. The checking account from which your debit card draws is a target, and don’t expect the government to rein in banks’ fee-mongering anytime soon.

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A swipe of the card for your morning cuppa joe. Ditto for your sandwich at lunch and the dry cleaner’s bill after work. Debit cards speed you through daily transactions that once had you waiting for change, reaching for your checkbook or racking up credit-card interest charges.

But, of course, it’s convenience at a price, and that price is going up. Although banks last fall rescinded debit-card fees or shelved plans to introduce them, increased fees for the checking accounts from which those debit cards draw are a fact.

It’s unconscionable for banks to squeeze customers for extra fees at a time when households are under more financial pressure than in decades, but it isn’t surprising to us. As we’ve noted, every time that banks look to raise revenue, they put consumers squarely in the crosshairs, and debit-card fees were just the latest moves in a never-ending bid by banks to get their hands into your wallets. Experts tell Consumers Digest that the number of banks that will add more fees and transaction costs will continue to grow.

FEEBLE REACTION. The latest money-grab attempt came as a result of a new federal rule that capped the swipe fee—the fee that big banks charge merchants for processing debit-card transactions. The rule, which went into effect last October, halved the swipe fee. Who will eat the estimated $9 billion in lost swipe-fee revenue? Hint: Look in the mirror.

Bank of America, which is the largest U.S. bank when it’s ranked by deposits, notably ditched its $5 monthly debit-card fee that had been scheduled to roll out this year. Other banks followed suit. SunTrust and Regions Bank even announced that they would refund the debit-card fees that they already had collected since initiating them in June and October, respectively.

That’s an admirable decision, but don’t you believe for a second that banks suddenly have seen the error of their ways. Although Bank of America announced, when it shelved its debit-card fee, that it had no future plans for such a fee, and no industry observers with whom we spoke could predict whether a debit-card use fee would return, we wouldn’t be surprised if banks try again at some point.

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The bank officials with whom we spoke all had a similar refrain, but no specifics: They’re doing their best to serve customers but recoup revenue. We expect that banks will continue to  look to you for other ways to recoup their lost swipe-fee revenue. Experts with whom we spoke say banks are likely to continue to aim at your checking account if not the debit card itself.

“Retail checking accounts that have debit cards used as an access vehicle have essentially been free for a long time in the United States,” says Patricia Hewitt of Mercator Advisory Group, which is a payments-research firm. That free use not only is no longer the case, but the fees that are being attached to typical checking accounts also are expected to rise sharply.

Bankrate, which operates the bank-monitoring website bankrate.com, reported in its annual survey that the average checking-account maintenance fee rose by 76 percent to $4.37 from $2.49 between August 2010 and August 2011. However, in the wake of being stymied on the debit-card use fee, experts tell Consumers Digest, checking-account maintenance fees could rise to as much as $30 per month, depending on your account balance. How quickly such increases might appear is unclear.

If that already weren’t too much, consumer watchdogs also tell us that you might be charged fees if you write paper checks—of perhaps as much as 50 cents per check—or a fee for bill payments that require extra work, such as if you authorize a business to create a draft on your bank account as a means of payment.

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