Consumers need to be aware of new fees for debit card use.
The Better Business Bureau (BBB) reports, “consumers are paying for new regulations that slash the fees that banks charge retailers every time they process a debit card payment.”
The BBB reports, “recent changes in banking laws capped the ‘swipe fee’ that banks can charge retailers for debit transactions which averaged 44 cents per debit transaction. However, October 1, 2011, the Dodd-Frank Financial Reform Act capped that ‘swipe fee’ at 21 cents.” The report says banks will lose millions of dollars a year, and are looking to get back some of that money by charging customers more.
Some financial institutions have instituted a standard monthly fee for debit card users, typically ranging from $3 to $5 a month.
“If you don’t understand a notice you receive or see a new fee on your account statement that you weren’t expecting, contact your financial institution and ask for an explanation,” said Melanie Duquesnel, President and CEO of the BBB Serving Eastern Michigan and the Upper Peninsula.
The BBB reports that apart from flat rate, monthly debit card fees, other changes may involve:
Per transaction fees – For limited use or if there is no monthly fee, there may be a 10 to 25 cent fee every time you use your debit card. That still allows cash back from retailers for debit card purchases and is still less expensive than withdrawing cash from an out-of-network ATM or standalone ATM, where withdrawals often cost $2 per transaction plus an additional fee charged by your own bank.
Rewards programs - Frequent flyer miles and other perks associated with debit card use cost the banks. These programs may be scaled back or eliminated.
Higher minimum balances – Some banks waive fees if a minimum amount of money is held in an account to keep in your bank to avoid debit card and other fees. That minimum balance may be increased by some institutions.
For tips on smart money management, visit the credit-management section of the BBB website.
