Bank of America to charge $5 monthly fee for debit card purchases
Most Bank of America customers will soon see a new charge on their statements -- $5 for any month in which they use a BofA debit card to make a purchase.
Consumers should prepare for more such charges, analysts say, as big banks strive to recover revenue they have lost to financial reforms adopted in the aftermatch of the economic meltdown.
The new Bank of America fee will be phased in early next year, said Anne Pace, a spokeswoman for BofA, the nation's largest retail bank.
Customers will still be able to use their cards at the bank's automated teller machines without being charged, the bank said Thursday.
They also can make debit purchases free if they have a mortgage from Bank of America or if they have a total of $20,000 on deposit at Bank of America and in certain Merrill Lynch accounts (you may recall that Bank of America's corporate parent bought Merrill Lynch as the financial crisis set in).
The bank, like others, has been testing ways to recover debit-card revenue that is going away because of new regulations.
Banks previously had charged merchants 44 cents on average every time they accepted a debit card for a purchase. Under new regulations that take effect Saturday, banks with more than $10 billion in assets will be able to charge merchants only 21 cents to 24 cents per transaction.
Bank of America and other big banks have said they will compensate by charging customers. "The economics of offering debit cards have changed," Pace said in an interview.
Merchant trade groups, which had engaged in a long and bitter lobbying war over the swipe" fees charged for debit-card purchases, said the changes would result in consumers paying lower prices for goods and services.
“Hidden fees are bad for consumers and bad for competition,” Jennifer Hatcher, vice president of government relations at the Food Marketing Institute, said in a statement.
“While the banks seem to try to skim every penny they can from their customers, retailers are doing everything that they can to educate consumers and protect them from hidden debit fees.”
Bank of America only plans to ding customers for $5 if they actually buy something with a debit card in any given month: no purchase, no fee. The fee applies no matter how many purchases are made in a month, Pace said, so a single purchase or 100 purchases, for example, would result in the same $5 charge.
-- E. Scott Reckard
Photo: A customer swipes a debit card to make a purchase in Seattle. Credit: Associated Press / Elaine Thompson