- Bank of America to charge $5 monthly fee for debit card purchases
- Fee won't apply to ATM withdrawals, person-to-person transfers and online bill pay
- Bank blames regulation for fee
NEW YORK (TheStreet) --Bank of America (Stock Quote: BAC) will begin charging customers who use debit cards for purchases a monthly fee of $5 early next year, as it seeks to offset regulations that limit the fee it can charge merchants for such transactions.
The fee will be applied to customers only if they use the debit card in any month to make purchases. No fees will be assessed for those who merely use the card for ATM transactions. Customers who wish to avoid the fee can continue using their checking accounts to get cash from ATMs, online bill payments and person-to-person transfers.
"The economics of offering a debit card have changed with recent regulations," Bank of America spokesperson Anne Pace said in a statement."This new fee allows us to continue to offer the convenience of a debit card with the full range of added features customers have come to expect - fraud protection ($0 Liability), overdraft prevention, record-keeping, fraud monitoring, and savings programs (Keep the Change and Add-It-Up)," she said.
Bank of America is the latest to impose fees for customers in response to Dodd Frank regulations that capped the fee that banks could charge merchants at 24 cents, lower than an average 44 cents that banks receive now.
An earlier proposal had suggested capping the fee at 12 cents but was dialed down after heavy lobbying from banks. The industry has argued that the caps would increase the costs of offering debit card services and that banks would be forced to pass on costs to customers.
Wells Fargo (Stock Quote: WFC) has said it will start charging a new $3 monthly fee to customers in four states beginning Oct. 14. Citigroup (Stock Quote: C) recently raised the monthly fee on basic checking accounts to $10 from $8.