Bank of America to start charging $5 fee per month for paying via debit card

NEW YORK — Bank of America said Thursday that it plans to start charging a $5 monthly fee when customers make debit card purchases. The fee will be rolled out starting early next year.

Customers will be charged the fee only 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.

Paying to use a debit card was unheard of before this year, but several banks have recently introduced or started testing debit card fees. That's in addition to the spate of other unwelcome changes checking account customers have seen in the past year.

Bank of America's 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.

The debit card fee is just the latest twist in the rapidly evolving market for checking accounts.

A study by Bankrate.com this week found that just 45 percent of checking accounts are now free with no strings attached, down from 65 percent last year and 76 percent in 2009. Customers can still get free checking in most cases, but only if they meet certain conditions, such as setting up direct deposit.

The changes come ahead of a regulation that goes into effect in October.

Starting Saturday, 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.

This summer, an Associated Press-GfK poll found that two-thirds of consumers use debit cards more frequently than credit cards. But when asked how they would react if they were charged a $3 monthly debit card fee, 61 percent said they'd find another way to pay.

With a $5 fee, 66 percent said they would change their payment method.

Several banks are nevertheless moving ahead with debit card fees.

SunTrust began charging a $5 debit card fee on its basic checking accounts this summer. Regions Financial plans to start charging a $4 fee next month. Chase and Wells Fargo are also testing $3 monthly debit card fees in select markets.

Bank of America to start charging $5 fee per month for paying via debit card 09/29/11 [Last modified: Thursday, September 29, 2011 10:09pm]

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