Bank of America’s new greedy effort to charge  customers $5 a month to use debit machines has exposed the whole underbelly of the “swiping” business.

Why is B of A so eager to charge a monthly $5 fee for using debit cards?  Because debit cards generate at least $16 BILLION  a year in fees for banks.  Visa and MasterCharge give $11 billion of that money to banking institutions and keep the remaining $5 billion for themselves.  The government says the fees are way out of line and its cracking down on Bank of America and others who see ATM machines as cash cows.

Is it no wonder that both VISA and Mastercharge advertise frequently to get your business?

Now that Congress is buckling down on hidden banking fees billed to consumer debit cards, Bank of America is hunting for a NEW sources of surcharge revenue.  You may not even realize how much you have been paying in surcharges  tacked onto every transaction involving your debit card.  You should.  Whatever credit card companies and banks charge retail outlets for the service, THEY PASS ON TO YOU.  The L.A. Times today explains:

 “The average fee charged per transaction is 44 cents (with the average transaction about $38), but the Fed survey pegged the true average cost per transaction industry-wide at only 13 cents per swipe — and as low as 4 cents after factoring economies of scale enjoyed by banks with large numbers of transactions.”

The cost of each debit transaction can be as low as .04 cents, and Bank of America wants to charge $5 a month for the privilege?  It’s all fat for the bank.

Here’s the good news, the Senate is working on legislation that would force banks, and especially Bank of America, to be more honest about debit card charges.  Until that measure is considered and passed, you have another option that will help you avoid such bank fees:  Don’t go to Bank of America!

In just the last few days, Los Angeles-based City National Bank and Chula Vista-based PacTrust Bank have announced they’ll forgo debit card fees for their customers, at least for the moment.

Perhaps move your business to banks that are more consumer-friendly.

Credit Unions are the best.

If you can’t or don’t wish to change all of your banking, you could step back in time and write a check!

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Filed under: Economy, Featured, Inside The KC, Politics, Sonja Eddings Brown by Sonja Eddings Brown, Oct 17, 2011