Swipe-happy debit card users may opt for cash in the coming months.
Earlier this summer, SunTrust Bank unveiled an “Everyday Checking” account and accompanying monthly fees: $5 for debit card use and $7 to use the checking account.
The only way to avoid the checking fee is to maintain a minimum monthly balance of $500.
The fee is a growing trend in response to changes in the industry, SunTrust spokesman Hugh Suhr told Florida-based News Chief in a recent interview.
Currently, this is the Atlanta-based bank’s only account with a debit card fee, but student checking accounts will be charged the fee next Spring, and all of the bank’s checking accounts will be converted to the everyday checking account, the News Chief reported.
Other banks aren’t too far behind, either.
Wells Fargo customers in Oregon, New Mexico, Nevada, Georgia and Washington will pay a $3 monthly fee for using a debit card beginning in October, as the bank tests out the fee, spokeswoman Lisa Westermann told the newspaper.
While Bank of America hasn’t announced any fees for debit card usage, it offers no guarantee for the future.
“Every bank is evaluating the fees going forward because of all changes imposed by recent congressional actions,” MidSouth Bank Chairman and CEO Lee Moss said.
“Many banks are going to take the path of charging fees for checking accounts and/or debit card and other services. Other banks are going to take the route of charging lower fees or no fees, but even that is subject to change over time, as business evolves.”
As for MidSouth, Moss says the Murfreesboro-based bank still offers free checking, does not have a charge for debit card usage and continues to offer free ATM usage anywhere throughout the United States.
“And there are no current plans to change that,” he said.
So what has prompted all these changes?
“In layman’s terms, the fees earned by banks when a client uses a debit card have been cut by about 30 percent,” Moss explained about the Federal Reserve’s move in July to cap the amount banks can charge merchants for debit card payments.
Merchants voiced concerns that banks were earning too much money and the fees were cutting into sales.
“Will merchants lower the costs of items purchased? I suspect not,” Moss opined. “I just means the revenue earned by banks on that service will drop.”
The decrease in fees for merchants means the banks have to make up loss somewhere. That’s where debit card users come into play; the fee has been transferred to the consumers instead.
“For a large bank, that is millions of dollars of lost revenue, so as always, what you charge for – interest on loans and for accounts – is constantly under revue as business practices change,” Moss continued.
Banks were also impacted by the cap on insufficient funds fees, along with the change how fees can be calculated.
“Banks will have anywhere from 20 to 35 percent fewer dollars coming in from those fees,” Moss estimated.
Community banks, national banks, credit unions – what is the best choice?
It’s really up to the customer’s needs, lifestyle and preference, Moss said.
“I think it’s more incumbent upon a customer of any financial services company to look at what their needs are, how they use their checking account and how they borrow money,” he said. “Frankly, it doesn’t matter where you bank; it’s really about what is most effective for you.”
Banking customers moving across state lines may opt for the convenience of a national bank, while government employees might like the idea of a credit union.
Moss added that community banks appeal most to people who live and/or work in that community and want to see locally owned businesses thrive. MP