More New Fees from Banks
Major banks and many regional banks are involved in a campaign to find revenue to replace what they thought would be a bonanza revenue generation source. This source was the monthly fee for debit card use. Banks underestimated the willingness of consumers to keep “taking it on the chin”. Consumers revolted and said “no” to the banks. A survey by Javelin Strategy and Research found that in the 4th quarter of 2011 more than 5.6 million consumers switched banks to smaller community banks or credit unions to avoid paying the debit card use fee.
Not to be daunted banks have now identified and are commencing to impose a series of new “fees”. According to some consumer groups banks have identified about 50 new fees that they can impose on customers. Some of these new fees include charges for paper statements, Internet account access, wire transfers, bill payment, iPhone deposits and account closing fees, to name a few. In addition to new fees banks are raising the dollar amount that they have been charging for traditional services such as account service charges, over-draft protection and fees, credit card use, etc. The new fees and additional dollar amount charges for traditional services which will soon be showing up as a debit item from a customer’s account will generate billions of dollars in new revenue for banks.
Banks individually and through their trade associations argue in Congress and elsewhere that they need these new fees and additional charges in order to survive. They point to new federal legislation imposing additional restrictions on banks as the reason they need new revenue.
They cite the regulations imposed by Dodd-Frank requiring additional disclosure mandates and other changes which they say increases their operating costs. They point directly to the Durbin Amendment imposed by Congress in 2011. This amendment reduced the debit card transaction fee on each individual debit card transaction that the banks charged retailers. This fee is called the “swipe fee”. Congress cut the amount of the fee in half. Rather than charge 42 cents for each transaction, banks can now only charge 21 cents. While banks opined that 42 cents per transaction was justified Congress determined that the 42 cent per transaction was far beyond the cost incurred by the banks.
Some in Congress argued that by charging 42 cents per transaction banks were once again “gouging” the consumer.
They point to the fact that eventually the costs is passed on to the consumer.
The debit card use fee debacle for the banks is evidence that the consumer can fight back against the abuses by banks. The consumer can fight back against the bank imposing new fees and charges. Consumers do this by moving their business from profit making banks to nonprofit credit unions.
For more information contact Associated Attorneys, LLC (866) 411-4693 or www.associatedAttorneys.com
About the Author:
Melvin R. Singleterry, a former Judge and former elected District Attorney is a licensed practicing attorney specializing in consumer debt law and consumer debt settlement