The Big Banks still don’t get it. Bank of America recently announced that it will start charging its customers $5 per month to use their debit cards. Wells Fargo and JPMorgan Chase are considering similar fees on their customers.
For many workers, debit cards have replaced credit cards as a more affordable way to make purchases with their money. Unlike credit cards that carry high interest rates on their balances, debit card transactions transfer money directly from customers’ bank accounts like writing a check.
The Big Banks claim that these new fees are necessary because the Federal Reserve cut the amount that banks can charge merchants each time their customers swipe a debit card. These so-called “swipe fees” are passed on to customers in the form of higher prices.
In reality, Bank of America is hurting for revenue because of its colossal losses due to the financial crisis. Last year, Bank of America lost $5.4 billion and as a result, the bank didn’t pay any federal income taxes. This is after the federal government bailed out Bank of America with a $45 billion TARP loan.
The good news is that there are plenty of credit unions and community banks that offer customers no-fee debit cards. Ironically, Bank of America may end up making even less money with these new debit card fees if they lose customers or their customers start paying with checks and cash.
For the 99 percent of us who are tightening our belts to survive, Bank of America’s debit card fee grab is one more sign that our financial system is working against us. Shame on Bank of America for putting its bottom line ahead of its customers’ needs.