Bank of America plans to introduce a $5 monthly debit card usage fee for many of its account holders beginning early next year, the company said on Thursday.
The largest U.S. bank by assets is implementing the fee to recoup lost revenue due to new industry regulations introduced since the 2008 financial crisis limiting overdraft and other fees.
"The economics of offering a debit card have changed," said Bank of America spokeswoman Anne Pace.
Bank of America [BAC 6.35 0.19 (+3.08%) ] is the latest large U.S. bank to introduce a regular monthly fee for debit card use, as new limits on overdraft and other penalty fees have pushed banks to introduce wider, monthly account maintenance fees.
Pace said customers expect certain features for their accounts, like overdraft and fraud protection, and the fee will offset some of those bank costs.
She declined to say how much the bank expects to earn through these fees or how many customers will be affected.
Customers who use the debit card for purchases will be assessed the fee. It will be waived for the bank's premium or platinum privileges accounts tied to the Merrill Lynch brokerage.
The fee will not be charged for using the card to access the bank's ATMs, Pace said.
The fee will be introduced early next year.
The solution for prudent money saving people is to pick a new bank. In a deleveraging environment with low net income margins, the only way the major banks can improve earnings is to cut cost and charge more fees!
This is not just a Bof A issue, both Wells Fargo and Citibank are testing similar plans for debit cards.
For the past 20 years I have banked at 2 different community banks. The first had 6 branches and my current bank has 3 branches. In both cases, the service was great and it cost me zero!
Community banks usually have very low minimum balances to get free monthly checking and they usually do not charge you to use your debit card.
There are plenty of very nice and safe small to regional banks where you can get great and friendly service and lower costs than the major banks. It has worked great for me and I highly recommend it.
Hope all is well.
J.D. Rosendahl, Rosey