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COMMENTARY | I dislike paying monthly banking fees. My reluctance to pay a fee most likely is a result of being a baby-boomer and fondly remembering the days when banks asked you to open accounts with them, and they might even have tossed in a toaster. Well, I don't need a toaster but I do need a place to deposit money.
have had accounts with Bank of America for a number of years and am used to their website. My checking accounts, both personal and business are free, as long as I have direct deposit for the personal account, and use the debit card attached to my business account, at least once each statement cycle.
Now, Bank of America wants to impose a charge of five dollars per month if you use your debit card, even once per month. There goes my free business account!
Bank of America is not the only bank that is imposing charges. Wells Fargo and Sun Trust are two other large institutions which have announced plans to impose a monthly fee on those who use their debit card.
Why are banks now charging consumers a monthly fee? Senator Durbin, (R, IL) tacked on an amendment to the Dodd-Frank Financial Reform Act that would limit the amount that a bank could charge a merchant for transactions. The fallacy was that the merchant would pass the savings on to the consumer, much the same way as the government does when they find that their costs are going down.
If I went to a store and used my debit card to purchase $100 worth of goods, the merchant had to pay a transaction fee to the bank. If I did that 10 times, the bank would collect 10 fees. The merchant would have already factored this fee into the selling price of the merchandise. People who paid in cash paid the same price, subsidizing my purchases, much as I would subsidize theirs when I paid with cash.
Since this legislation went into effect, capping the transaction fee at basically 24 cents, I have not seen prices come down, not even by one or two percent. Merchants have not passed the savings along to the customers. Now the retailer makes more money, and the banks make less. As a result, if I want to use a debit card issued by my bank, it will cost me $60 a year and that is ridiculous.
I will look for another organization. Local banks such as Savings Bank of Danbury, Newtown Savings Bank and Citizens Bank, continue to offer free checking accounts and debit cards. There is no shortage of local banks in Connecticut, and I am certain that other states have community minded banks as well.
If I want to limit myself to online banking, Ally Bank and USAA Bank are among the institutions that offer free checking and debit cards, along with other services such as online bill paying.
When I do switch I will have to go through the hassle of making sure that I update all my direct deposit and direct debit information. I don't relish that idea but it is better than paying what I consider to be an unfair and egregious fee.
The latest action by my bank simply gives me yet another reason to dislike the entire Dodd-Frank piece of legislation.
More from this contributor:
- Bank of America