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How You Can Avoid The New Debit Card Fees
Posted By Ron On October 6, 2011 @ 1:00 AM In Banking,Government | Comments Disabled
Are you angry that banks are now charging you to use your own money?
When Bank of America announced their (bad/dumb/stupid/greedy) decision to start charging me and millions of other people for using our debit cards to access our own cash that they make a fortune using and lending out, I was pretty well ticked off. As an MBA and a business owner, I understand the regulatory environment changed because of a short-sighted Congress who wouldn’t know their belly-button from a hole in the ground (this is a family blog) and I do understand the revenue shortfalls this too-big-to-fail bank will experience. But dang it, that’s MY money and we’ve been conditioned for the last 20 years to use our debit cards instead of credit cards  and now the game changes in mid-stream.
When you or I use a credit card  to make a purchase of say, $100, the merchant only receives about $97. The remaining $3 is used for processing the card — a portion goes to American Express , MasterCard, Visa, or Discover , a portion goes to the card processor, and a portion goes to the bank who handled the money. When you or I use our debit card, typically there isn’t as much going on — essentially this becomes a simple online transfer of funds from your checking account  to the merchant’s, handled by a card processor. What recently happened was that Congress placed a limit on the amount that processors and banks could zing merchants … now just 21 cents per transaction. Swipe your debit card to buy a $4 latte and the processor gets 21 cents … swipe it to buy a $1,000 LED television and the processor also gets 21 cents. Processors aren’t happy and neither are the banks, so the banks are responding by charging an additional fee for debit card use to make up for their lost fees. Guess who pays?
I’m not going to stand for it.
In the event you don’t want to change banks, stop using their debit card and go back to old fashioned checks or credit cards  (diligently paying them off each month), but be certain to open an account at Ally Bank  or at PerkStreet . Neither of these banks will charge you to use your own money and after speaking with representatives from both of them this past weekend, I can tell you they were astonished that Bank of America (and several other banks including Regions, Citi, Chase, and Wells Fargo) made such a move.
Banks are predicted to lose up to $6 billion in revenues because of this change in fees. Perhaps they shouldn’t have built all those fancy offices and should focus more on providing great customer service like Ally Bank  and PerkStreet .
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