Bank of America to charge $5 month on debit card use.
This isn’t tech news, but since it concerns my wallet, I had to post this up. One of the Nation’s largest Banks, Bank of America will soon be charging its customers $5 every month for using your debit card. The charge will only occur only during the months you use your debit card. If with the way people are struggling out there. if you use your card only to withdraw cash from the atm, you won’t be charged. Seriously considering how people are managing out there, they decide to pull this crap. I hope they lose a huge ton of customers. Yahoo news is reporting
The fee will apply to basic accounts, which are marketed toward those with modest balances, and will be in addition to any existing monthly service fees. For example, one such account charges a $12 monthly fee unless customers meet certain conditions, such as maintaining a minimum average balance of $1,500.
Customers will only be charged the fee if they use their debit cards for purchases in any given month, said Anne Pace, a Bank of America spokeswoman. Those who only use their cards at ATMs won’t have to pay.
The debit card fee is just the latest twist in the rapidly evolving market for checking accounts.
The changes come ahead of a regulation that goes into effect next month.
Starting Oct. 1, the regulation will cap the fees that banks can collect from merchants whenever customers swipe their debit cards. Those fees generated $19 billion in revenue for banks in 2009, according to the Nilson Report, which tracks the payments industry.
There is no similar cap on the merchant fees that banks can collect when customers use their credit cards, however. That means many banks are increasingly encouraging customers to reach for their credit cards, in hopes of reversing a trend toward debit card usage in the past several years.
An increasing reliance on credit cards would be particularly beneficial for big institutions like Bank of America, which have large credit card portfolios, notes Bart Narter, a banking analyst with Celent, a consulting firm.
“It’s become a more profitable business, at least in relation to debit cards,” Narter said.