The news that Bank of America is imposing a $5 monthly fee for debit card users angered a lot of people last week. Although the news shouldn’t have come as a surprise since starting Oct. 1, legislation took effect meaning banks could no longer collect outlandish fees from merchants when shoppers use their cards.
Unfortunately for banks, new federal rules make debit cards less profitable, which means those fees now have to come out of consumers’ pockets.
This is one of the reasons many banks have already done away with rewarding people for using their card; now they’re making them pay to use it. In addition to Bank of America, Wells Fargo plans to issue a $3 fee as well as Chase; and Regions Financial is going to start charging $4 next month and SunTrust is charging $5. While some banks will charge you only if you use the card, others will charge for simply having the plastic in your wallet.
If you don’t want to pay the fee, savingsadvice.com offered these tips:
n Go back to cash: Most banks are not charging for an ATM-only card. Give them back your debit card and ask for an ATM card. Withdraw whatever amount of cash you need to get you through a few days at a time. The more you do this, the better you’ll become at judging how much money you need to get you through a week.
n Use credit cards: Choose a card with no annual fee and that offers rewards you can use. Most banks aren’t (yet) charging annual fees for credit cards, although there are some that do. If you use a credit card instead of a debit card, you still get the ease of swiping at the register and you’ll earn some rewards in return. Just make sure you can pay for everything at the end of the month because credit card interest will make that debit card fee seem very small in comparison.
n Look into credit unions or local banks: There are some banks that aren’t charging debit card fees. Typically these are credit unions and smaller community banks. There are so many credit unions these days that you can likely find one for you and most communities have at least one local or regional bank.
n Meet requirements: If your bank offers a way to dodge the fee, such as by maintaining a minimum balance or using direct deposit, do it if you can. If you want to stay with the bank and not have to look elsewhere, this may be your best option.
n Go back to checks: If checking from your bank is free, it may be your best bet. Some banks still offer free checking yet charge the debit card fee. Know your banks’ policies and make your choice accordingly.
For similar advice, visit www.savingadvice.com.