The impact of debit card fees on banking relationships

The current generation of youngsters does not believe in using cash for any of their purchases. They would rather pull out their debit cards and let the retailer use the swiping machine to pay for their purchases. Between debit cards and school and college ID cards, they have grown up without understanding many of the nuances of the banking industry. Thanks to their ignorance, most of them will not even understand when the banks are swindling them off their hard earned money in the form of newer charges and fees.

One of the largest banks in the United States, the Bank of America, has recently made an announcement stating that customers who hold an account in their bank and have debit cards will be charged a monthly fee of $5 starting 2012. In addition to this, the bank is also testing the waters by charging newer fees on checking accounts. Following suit is the Sun Trust Bank that has also started levying a $5 monthly fee for customers who use debit cards and is also considering certain charges related to checking accounts. Not to be left far behind, CitiGroup Inc is also bringing about many changes, the most notable being the $1500 minimum balance needed for checking accounts. Another bank that is considering a monthly fee for debit cards is Wells Fargo.

One of the surveys conducted in August this year took into consideration the major banks and financial institutions with a strong presence in 25 large markets to understand the fees levied in recent times. The study revealed that 45 percent of the banks and financial institutions still continued to offer free checking accounts. But, this is a steep decline as compared to 76 percent that were offering free checking accounts in 2009. The survey also revealed higher averages in ATM surcharges, maintenance fees, minimum balances and overdraft fees to name a few.

The ones who will be the most impacted are the younger generation people who cannot afford large balances in their accounts. For example, a person who holds a checking account with Bank of America will not just be paying the $5 fee for using debit card, but also $6-$9 as monthly maintenance charges that account for $168 a year. The increase in fees and levying of new fees by the banks can be attributed to the new regulation that has just come into implementation which curbs the interchange fees for each transaction.