Bank of America has announced that they will start charging their account holders a $5 a month fee when they use their debit card at a merchant during the month. There will be no fee for use at an ATM machine. This is primarily in response to laws that were recently passed limiting the amount of fees that banks can charge merchants for debit card usage. So since this would result in lost revenue to the banks, the banks are now going to charge the consumers (account holders) directly. It is believed that most other banks will follow BOA’s lead and also charge their holders a similar fee.
My question is many times when I use my debit card, I will be asked by the cashier, “Debit or credit?” Since my debit card has a Visa logo on it, it can be processed either way. If I say debit, then I am required to enter my pin #. If I say credit, then the computers check to see if the card is legit and processes the transaction. I would presume that the merchant also get’s charged differently by the bank depending upon how it’s processed. So if I now tell them to process it as a credit card transaction, will I still be charged the $5 fee from my bank?
Anybody that works at a financial institution, have any idea?
My guess is yes you will be charged in both cases, but you should really call BofA customer support and ask them directly. Whatever notificaiton you received from them should spell things out, but often times it’s difficult to figure out what their rules are. You are not alone.
To be safe you could sign up for a no fee Visa or MC credit card and just pay it off every month and only use the debit card at the ATM when you need cash.
That’s what I thought. We primarily use our AMEX with reward points for 98% of purchases, and pay it off each month. The debit card is used for places that don’t take AMEX. But if I could avoid the $60 a year charge, I would like to.
You should be able to get a no annual fee VISA from just about anyone (but almost certainly from BofA itself) that you could use in lieu of your debit card.
So basically BoA is telliing people “We don’t want to deal with the average everyday slub, just the big corporations.”
Is there some kind of account you can get with them so you wouldn’t have to pay the fee. Like if you keep a minimum of $1,000 in the account we’ll waive the $5.00 fee?
B of A has been saying this to anyone who cares to listen for years and years. If you are a person with less than about $4K in the bank you are probably better served by taking your business elsewhere.
IIRC, credit means the merchant pays a percentage (1.5% to 3% or more) while debit, they pay about 50 cents soon to go down by law to 24 cents IIRC. (Hence the surcharge on cardholders) Merchants probably prefer you pay debit, and if you don’t pay attention, may process it as debit.
The question is, does it really cost 50 cents to process a debit transaction? I put this in the same category as “does it really cost 10 cents for the cell company to transmit your text message?” It’s a gravy train, and BoA wants to screw the customers and blame it on the politicians who are forcing it to stop gouging.
Thank the Congress of the United States. When they arbitrarily capped the interchange fees on debit card txns, the bank needed to replace the revenue. Instead of being indirectly charged via your merchant (higher prices) you will be directly charged by the bank. BofA is first, but will certainly not be last. And don’t hold your breath waiting on your friendly neighborhood merchant to kick back the extra money they will be seeing due to the cap.
The incremental cost of one transaction is undoubtedly tiny (I’d guess < $0.01). BoA has fixed costs associated with supporting the cards and the rest of their operations, and they have accountants who can decide where to attribute what portion of various costs to whatever they want.
They could probably come up with a defensible cost per transaction of pretty much any damn thing you want. The old joke about asking various people what 2+2 is that ends with the accountant asking “what do you want it to be” is quite apropos.
My dad-in-law just got back from the bank and said he’s not being charged because he’s a “preferred customer.” (He has more than whatever the minimum balance is to avoid fees. This is just one of those fees you can avoid if you have a “premium” account, in other words.)
Yeah, Canadian banks have about the same fee structures as US banks, and a lot less risky loans and other stupid ventures. As a result, they are consistently the most profitable business in Canada. It’s a gravy train without competition, and the banks are disturbed because the tap is been turned off on them. This is the banks pushing back and blaming it on Congress in hopes it will get Congress to let them have their gold mine back. They blew all their profits on loans they were too stupid to realize were bad, and now consumer spending fees have to make up for it.
I’ll just switch to a credit card with no annual fee if my bank decides to do this and pay it off in full each month. At least with the credit card I get a few bucks back each month rather than paying $5 a month.
While I would rather gnaw my own foot off than do business (and that includes even a transaction of $0.01) with BoA, this is exactly why I just pulled my money out of my bank and took it to a credit union. Far less ass rape of my account balance.
I don’t need that. As I said, we use our AMEX rewards card for 98% of all payments. We rack up about 150,000 points a year this way. Pay no interest. And usually take a hell of vaction using the points each year.
That’s good to hear. I’m an Advantaged account holder with BOA. That’s the first I’ve heard that premium account holders won’t be charged the debit card fee. Thanks.
Ditto the above posters who have switched to credit cards in lieu of debit cards. My bank started charging 50 cents per debit transaction, so I switched banks. Six months later my new bank started charging 50 cents per debit transaction. Sigh.
So, I got a rewards card that gives you cash back on purchases. Typically only 1%, but in special categories you get 5% in some months. If you have the discipline to pay it off each month just like you were using a debit card, you pay no interest, and get this money back.
I just looked and in the last year, I’ve gotten over $200 in cash back. Not enough to take a nice vacation like a prior poster, but still $200 I didn’t have and a damn sight better that paying a banking fee.
Not at all. BofA is saying “For some reason the masses of everyday slubs act like we are the only bank in town and our experience shows that they will mostly roll over and pay this fee (after a little grumbling perhaps). We might as well take their money.”
(He has more than whatever the minimum balance is to avoid fees. This is just one of those fees you can avoid if you have a “premium” account, in other words.)