Monthly fees on debit cards being tested by banks

Almost all of us use debit cards to make purchases on a regular basis. However, some banks are planning to introduce the monthly fee on debit cards for using them on checking accounts. This may take away some of the shine from these cards and make it look unattractive to many.

This is a move to counter the setback that most banks are facing after the latest regulations have taken effect, where there is a cap on the amount of swipe fees that banks can charge the retailers while processing debit card transactions. Now, the banks claim that they have to make up for the lost revenue and earn that fee from somewhere else. For instance, they are eliminating the debit card reward programs and also charging customers a monthly fee for using the debit cards to shop.

For example, Wells Fargo has already notified its customers this month that it plans to test the debit card activity fee in the month of October. A $3 fee would be charged each month if the customer uses the debit card that is linked to either a personal or a business checking account, in order to make payments or purchases. However, ATM transactions will not attract a fee.

This is going to be tested in five states – New Mexico, Oregon, Nevada, Washington, and Georgia. However, the bank has stated that these accounts will continue to offer other perks such as card personalization, where you are allowed to put a picture of yourself, your pet, or anything else.

Lisa Westermann who is the Wells Fargo spokeswoman, has stated in an e-mail that this is one way to recover the lost revenue.

A $5 monthly fee has been implemented recently by SunTrust Bank. This fee would be charged if cardholders use the debit card to make purchases. This is on the cards that are used on the Everyday Checking account and the fee would be added to its student checking account sometime next spring. However, during any given month, if the debit card is used by the cardholder to make a purchase, by either using a PIN or by using a signature, then the bank would charge a single fee of $5. This fee is not applicable if the card is used for ATM transactions.

Hugh Suhr, the spokesman for SunTrust stated in an email that in the present environment, the industry is likely to see an upward trend in the debit card usage fee.