Back in August, we wrote a piece entitled, “The New (Reduced) Debit Card Swipe Fees Are Coming to Retailers,” highlighting the consequences for the Federal Reserve voting to reduce the amount of debit card interchange swipe fees banks could charge retailers. Just as we had expected, big banks rolled out all sorts of new debit and checking account fees to recoup some of the losses. However, because of the backlash they received from major social media campaigns including a designated bank transfer day, the banks recanted. So, with all the noise and the potentials for other fees in the future, should you consider switching to a no fee bank?
Big banks tried rolling out new fees
The headlines of late have been filled with news that Bank of America withdrew their plan to charge debit cardholders a new $5 monthly fee next year for card purchases. It is important to note that if you just used your debit card to withdraw money from the ATM, you would not be charged at all which seems to be an area of confusion. In addition, even if you used your debit card to make purchases the monthly fee would have been waived for premium customer. These customers typically maintain a minimum monthly balance and/or have a credit card, mortgage or brokerage account with the bank.
Bank of America isn’t the only one that attempted to roll out new fees. Wells Fargo launched a pilot program on October 14th to charge certain debit card holders $3 per month for using a debit card in addition to regular checking account fees. The program only covered Georgia, New Mexico, Nevada, Oregon and Washington. If the fees were to go into effect for all of Wells Fargo debit card customers, it would have generated $120 million in revenue per month or $1.44 billion a year based on the estimated 40 million debit card holders at Wells Fargo. But, because of customer backlash, these programs were shutdown.
Are there any banks offering free checking and no fee on debit card transactions?
Even though many of these banks dropped their new fee programs, you may still be wondering if there are any banks that don’t charge any banking fees. Some of the smaller and online banks don’t charge checking or debit card transaction fees. Charles Schwab, ING Direct, USAA Federal Savings and several credit unions and community banks have maintained their no fee policy.
Should I switch to a no fee bank?
While nobody wants to spend any more money than they have to on their bank, fees alone are not the only factor to consider when evaluating a bank for personal or business use. An additional $60 to $200 a year in fees would still probably be worth it if you have a strong relationship with your bank, they offer certain services that other smaller banks don’t offer and they are convenient. For instance, you may only have a checking or savings account now but in the future you may need a mortgage or a brokerage account which may not necessarily be available at a no fee bank. On the flip-side, if you’re facing a financial hardship and literally every dollar is needed to get by, then a no fee option should be seriously considered. So, the answer to the question depends on your specific circumstances.
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