Banks beginning to introduce, test debit card fees

NEW YORK -- Will a monthly debit card fee soon be the norm?

Bank of America said on Thursday that it plans to start charging a $5 monthly fee when customers make debit card purchases. The fee will be rolled out early next year.

Paying to use a debit card was unheard of before this year and is still a novel concept for many consumers. But several banks have recently introduced or started testing debit card fees. That's in addition to a spate of other unwelcome changes checking account customers have seen in the past year.

Bank of America's announcement carries added weight because it is the largest U.S. bank by deposits.

In Western Pennsylvania, banks contacted said they do not charge debit fees to customers who use cards to make purchases.

Whether debit fees may come eventually, PNC Bank spokesman Fred Solomon said, "We don't speculate about the future."

"We do not currently have any charge like that," First National Bank spokeswoman Kathy Hammons said, adding the bank continuously reviews its products and policies.

Centra Bank, with four branches in Fayette County, is believed to be the first bank with a presence in Western Pennsylvania to charge customers a fee to make a debit card purchase. The Morgantown. W.Va.-based bank charges customers 50 cents when they use a personal identification number to make a debit purchase at merchants.

Bank of America's fee will apply to basic accounts, which are marketed toward those with modest balances, and will be in addition to any existing monthly service fees.

Customers will only be charged the fee if they use their debit cards for purchases in any given month, said Anne Pace, a Bank of America spokeswoman. Those who only use their cards at ATMs won't have to pay.

A study by Bankrate.com this week found that just 45 percent of checking accounts are now free with no strings attached, down from 65 percent last year and 76 percent in 2009. Customers can still get free checking in most cases, but only if they meet certain conditions, such as setting up direct deposit.

Starting Oct. 1, a new regulation will cap the fees that banks can collect from merchants whenever customers swipe their debit cards. Those fees generated $19 billion in revenue for banks in 2009, according to the Nilson Report, which tracks the payments industry.

This summer, an Associated Press-GfK poll found that two-thirds of consumers use debit cards more frequently than credit cards. When asked how they would react if they were charged a $3 monthly debit card fee, 61 percent said they would find another way to pay.

With a $5 fee, 66 percent said they would change their payment method.

SunTrust, a regional bank based in Atlanta, began charging a $5 debit card fee on its basic checking accounts this summer.

Bank of America's debit card fee will be rolled out in stages starting with select states in early 2012.