Friday, September 30, 2011

Bank of America to charge customers monthly fee for using debit cards, could spark trend among banks

Bank of America will charge customers with lower-tiered accounts a $5 monthly debit card fee.

Bank of America will charge customers with lower-tiered accounts a $5 monthly debit card fee

Count Bank of America as the latest lender to slap customers with a fee for using their debit cards.

Starting early next year, the nation's largest bank will charge many of its account holders $5 a month for making purchases with a debit card.

The move will only affect those with lower-tiered accounts, said the bank. BofA customers with Premium and Platinum Privileges accounts - which require balances of $20,000 and $50,000, respectively - will be exempt from fees, as will college students with CampusEdge accounts.

Customers making cash withdrawals at the bank's ATM machines will also be spared the fee. The charge would only apply in months a customer buys something using a debit card.

Bank of America - the beneficiary of $45 billion in taxpayer-funded bailouts since the financial crisis in 2008 - is introducing the fee to offset anticipated lost revenue from recent legislation that limits how much banks can charge for overdrafts, debit-card swipes and other fees.

"The economics of offering a debit card have changed with recent regulations," BofA spokeswoman Anne Pace said Thursday.

Several U.S. banks, including Wells Fargo, Chase and SunTrust, have already implemented fees from $3 to $5 or are testing it in certain markets. BofA's joining the pack could be an ominous sign that more banks will follow suit, said Bill Hardekopf, CEO of LowCards.com.

"Like any industry, the top companies look at each other to see what they're doing to generate revenue, so this could be a harbinger of things to come as others may follow," Hadekopf said.

"This could be the beginning of a trend among top ten banks with large debit card portfolios," Ben Woolsey, director of marketing and consumer research for CreditCards.com, told the Daily News.

"Hopefully competitive factors will prevent other banks from following suit."

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