By Dennis Seid/NEMS Daily Journal
Starting this month, many debit card users will be charged another debit.
Regions Financial is charging its customers a $4 monthly fee for using its debit card. Wells Fargo and Chase are testing $3 monthly fees. Bank of America, the nation’s largest bank, says it’s going to start charging its debit card customers $5 a month.
The reason for the charges, banks say, is the higher cost of doing business. Specifically, the financial institutions point to higher regulations they say cut into their profits. The Dodd-Frank financial reform law caps the “swipe fee,” or transaction fee, from 44 cents to 21 cents. When customers use debit cards in stores, merchants pay banks for each transaction. Financial institutions with assets of less than $10 billion are exempt, but some analysts think it’s inevitable that higher fees will eventually be passed on to everyone.
“The result of the change in the debit card interchange rule is that consumers get stuck with the bill,” said Greg McBride, senior financial analyst at Bankrate.com.
BancorpSouth and Renasant, two of the largest Mississippi-chartered banks, say they’re holding the line on debit card fees.
BancorpSouth, with $13 billion in assets, is affected by the swipe fee legislation and estimates it could lose as much as $12 million annually.
Regions, by comparison, expects to lose about $170 million annually.
“While BancorpSouth does not currently charge a debit card fee and has no plans at this time to do so, we continue to analyze the impact to the company on the loss of revenue due to the regulatory changes earlier this year,” said BancorpSouth spokesman Randy Burchfield.
Renasant, with $4 billion in assets, says it’s not charging its debit card users, either.
“The fee increases being seen by many banking consumers are due to the recently passed Dodd-Frank legislation’s government-imposed interchange fee restrictions on debit card transactions,” said Renasant spokesman John Oxford. “This legislation has forced some banks … to replace their decreased interchange income by eliminating free checking and adding monthly fees to use their debit cards. Renasant Bank, however, does not have a monthly charge for debit cards and has no plans to add a charge.”
And it’s not just debit card fees popping up. Many banks also have all but eliminated free checking or added other fees to make up for lost income.
Bankrate.com conducted a recent study showing 45 percent of noninterest checking accounts don’t have fees, down from 65 percent last year and 76 percent in 2009. The study also showed 92 percent of checking accounts waive fees if customers meet certain requirements, such as carrying a minimum balance.
And some other good news: Fees on debit cards are still uncommon. Only 4 percent of accounts charge customers for using a debit card at the point of sale, and less than 2 percent charge a monthly or annual fee for using a debit card.