BofA has 57 actor customer and small-business accounts. If a majority… (Mario Tama, Getty Images )
New federal debit agenda rules won’t bang in until Saturday. But Coffer of America ashen no time in announcement a $5 account fee for debit agenda purchases to accomplish up for the accepted bead in revenue.
The rules in catechism absolute how abundant banks can allegation to action debit agenda transactions. Those fees now boilerplate 44 cents per auction and are paid by merchants. After Saturday, banks won’t be able to allegation added than 21 cents.
The Federal Reserve has bent that this is a “reasonable and proportional” amount, absorption how abundant it absolutely costs banks to action a debit agenda transaction.
For its part, BofA has estimated that these new rules will bulk it about $2 billion annually in absent revenue. Industrywide, these processing fees brought in $19 billion for banks in 2009, according to the Nilson Report, which advance agenda payments.
So actuality comes a $5 fee to use your debit card, able aboriginal aing year, whether you accomplish one acquirement a ages or 100.
Anne Pace, a BofA spokeswoman, told me the new regulations accept afflicted “the economics of alms a debit card.”
She said barter await on such casework as artifice and defalcation protection, and those casework can’t be offered for free. “That accessibility comes at a cost,” Pace said.
But let’s stop and anticipate about this for a second. The Fed says 21 cents is a fair bulk for banks to allegation for processing debit agenda sales. BofA isn’t adage it’s activity to lose money by charging this amount.
What it’s absolutely adage is that it will accomplish beneath money from debit cards by accepting to allegation a reasonable rate. And allegedly the coffer aloof can’t abdomen accepting to acquaint shareholders that their pockets won’t be billowing absolutely as abundant as before.
So it’s slapping barter with a ample fee — $60 a year — to accumulate the banknote abounding in.
Do the math: BofA has 57 actor customer and small-business accounts. If a majority of them uses debit cards, we’re talking a asset of about $3 billion a year — or $1 billion added than BofA is currently authoritative from transaction fees.
Meanwhile, Wells Fargo is set to activate testing a $3 account debit agenda fee in Georgia, New Mexico, Nevada, Oregon and Washington. Chase is experimenting with a agnate fee in Wisconsin.
“We bailed out the banks, and now they appetite added money?” asked Susan Kirk, who receives her California unemployment allowances via a BofA debit card. “These bodies are aloof greedy.”
At atomic Kirk and about 1 actor added Californians accepting unemployment allowances through BofA debit cards can booty alleviation that the new $5 fee won’t affect them. The accompaniment Employment Development Department says the account fee won’t administer to its beneficiaries.
The coffer says it won’t hit bodies with the fee for ATM affairs or if they don’t use their debit agenda for purchases. It additionally won’t agitate you bottomward if you accept your mortgage at BofA or at atomic $20,000 in accumulated balances at the bank.
But abounding bodies will be clumsy to contrivance the bullet. These are the bodies who don’t accept $20,000 added sitting in the bank. These are the bodies who singed their fingers application acclaim cards and accept carefully switched instead to debit cards.
These are the bodies who bought into banks’ band that debit cards represent advanced convenience, and that this is a added able and eco-friendly way of accessing your money than application checks.
I asked BofA’s Pace how abundant it absolutely costs the coffer to action a debit agenda transaction. She beneath to answer.
I asked how abundant it costs the coffer to accommodate artifice and defalcation protection. She beneath to answer.
I artlessly asked how abounding debit agenda users the coffer has. She beneath to answer.
Nevertheless, Pace said that BofA is “trying to be bright and cellophane with customers” about its fees.
The problem, of course, is that until BofA and added banks appear apple-pie on how abundant it absolutely costs them to action artificial and accommodate accompanying services, we accept to booty others’ chat for it. The Fed says 21 cents is a astute fee for a debit agenda sale.
Some customer advocates say the absolute bulk to banks, acknowledgment to the huge aggregate of automatic affairs candy daily, is afterpiece to a penny or two.
In this light, that $5 account fee is authentic gravy.
Put addition way, BofA isn’t aloof accepting its block and bistro it too. It’s confined itself addition piece.
David Lazarus’ cavalcade runs Tuesdays and Fridays. He additionally can be apparent circadian on KTLA-TV Channel 5. Send your tips or acknowledgment to [email protected]
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