Sen. Dick Durbin, D-Ill has extended his highest level of harshness and criticism to Bank of America for its decision to levy a monthly fee of $5 upon all debit card users.
“It’s overt, unfair and I hope their customers have the final say,” the Senator declared according to foxnews.com.
Such debit card usage fees may become the norm for many banks as they attempt to recoup revenue losses felt by the recently enacted Durbin Amendment to the Dodd-Frank Financial Reform Act. The amendment regulates bank’s fees for processing a debit card at merchant’s point of sale, known as the interchange fees. The new law caps these fees at 21 cents per “swipe”; and Senator Durbin, after whom the amendment is named, calls the previous interchange fee system “unfair.”
“It seems that old habits die hard for Bank of America. After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers,” Durbin said to foxnews.com. This may seem a bit controversial, in the light of BOA’s receipt of Fed’s bailout money in excess of $45 billion dollars, during the country-wide financial crisis.
Smaller, regional banks have opted to instate a monthly debit card usage fee, such as the Atlanta-based Sun Trust and the Alabama-based Regions Financial, while other big nationwide banks, like Chase and Wells Fargo, are testing similar debit card usage fees in selected areas.
BOA will begin charging customers in select states the announced debit card usage fee as soon as early next year. The fee will not affect customers that only do purchases by getting cash out of ATM machine. The fee will applied as soon as a customer uses a debit card to pay for a purchase at a point of sale.
Consumers have been very upset about the new fees. Those that wish to avoid paying any additional debit card fees have a few options – they can abandon using their debit card to make purchases and stick with cash or credit at the register, they can write a letter to Congress voicing their disapproval of the fee, or they can look into switching banks. The later may be a problem, as more banks have decided to impose fees on their debit card users.