Banks across the country have been adding fees on little things here and there to make up for losses they are anticipating from the debit card reform. In keeping with this pattern, Bank of America just announced that it plans to charge $5 to replace lost debit cards. If the card is stolen, however, the fee of $5 will be waived. JPMorgan Chase already charges the same amount for the same purpose.
Bank of America states that its new debit card replacement fee will go into effect in September. For those customers who think they cannot live without their debit card for even one day, consumers can have the bank overnight the new debit card for a $20 fee.
The Follower, not the Leader
By no means is Bank of America the first major bank to institute these types of fees. Chase has been charging card replacement fees, and many major and smaller banks are charging fees for various types of account services. According to Creditland.com, the number of free checking accounts declined last year for the first time since 2003. In 2009, 76% of checking accounts were free, while in 2010, the number slid to 65 percent.
Part of the decline is due to the fact that banks are now having to come up with ways to cover the estimated $10-$14 billion annual loss in revenue expected once the new debit card swipe laws go into effect the end of July.
The new law will affect the amount of money merchants can be charged for each debit transaction. Currently, merchants pay a fee of about 1% of the transaction, or an average of 44 cents. Under the new rules, the maximum the merchant can be charged is 12 cents for each swipe.
Debit Cards Win Popularity Contest
In 2010, debit cards were used 37 billion times to make purchases. That was nearly twice as many transactions completed with credit cards, which saw 19 billion transactions. The use of checks came in third, with about 18 billion. With the increased popularity in debit card usage now combined with the hit in fees that banks are going to take, banks, especially major banks, are looking for ways to make up the loss of revenues. For banks such as Bank of America, Chase and others, one way to make up for these fees is to start charging for lost debit cards.