The news Thursday that Bank of America is imposing a $5 monthly fee on people who have the nerve to use their debit card to buy things probably should not have come as much of a shock.
Wells Fargo, the other giant coast-to-coast bank, had already revealed its plans to test a $3 fee in the wake of new federal rules that made the cards less profitable for many banks.
Bank of America probably has bigger problems than any of its competitors. So it stands to reason that it would make a bolder move. After all, it is dealing with a pile of troubled mortgages, legal fallout from the sales of bonds made from those loans and questions about how it serviced its home mortgages.
Still, the scale of its changes mean that most debit card shoppers who do not have Bank of America mortgages or more than $20,000 in account balances will need to pay that $5 monthly fee. It is a tax on pretty much every customer without a healthy salary or investment income, plus those who want to keep their savings elsewhere for whatever reason.
Bank of America and Wells Fargo are hardly alone here, since other big banks have toughened the rules for people who want to keep free checking, or have killed off rewards programs to save money. And we probably haven't heard the last of the new rules, either. All of these moves together, however, raise a simple and rather obvious question:
Why is anyone still doing business with banks like these?
Bank of America's move is part of a broader effort to overhaul its checking account lineup. As of sometime early next year, it will have four basic accounts, only one of which will waive the $5 monthly fee for debit card users who want to use the card for purchases. ATM use will not incur the monthly fee, but charging recurring bills like gym memberships or mobile phone plans to your debit card will.
Only Bank of America customers with more than $20,000 in combined checking, savings and certificate of deposit accounts or a bank mortgage (of any size) will be able to avoid both the debit card fee and any other monthly fee for falling below a required minimum balance level.
As a result of these moves, plenty of customers will be looking at their options. What would cause people who count on debit cards to help them live within their means to stick around despite the $5 a month fee?
The first factor is the perceived pain involved with switching. And it is a pain, though not as much as you may think. It shouldn't take much more than 90 minutes to reboot direct deposit of your paycheck and move all the automated payments from one account to another.
There may be a few hiccups over the next couple of months, but they shouldn't take more than a few minutes each to fix. Try to leave some money behind in the old account for a few months just in case it takes billers a few cycles to make the switch.
There may well be plenty of people who have no problem with an extra $5 a month. Claudia Smith, who lives in Fayetteville, Ark., said she wasn't worried about the new fee, even though she used her debit card extensively. "It's well worth $5 a month to not have to carry a checkbook," she said.
The fed-up have plenty of places to go to find a better bank these days. There is, in fact, a service operating out of findabetterbank.com that can help. The website of the Move Your Money project is worth a look, too. You can search for a credit union that will take you in at creditunion.coop.