Debit card users the latest victims of the commercial banking industry's attempts to raise capital in a struggling economy. Bank of America announced it will charge millions of customers with a $5 monthly fee to use BofA debit cards, and other large banks are expected to do the same. The $5 monthly fee will cost a customer $60 per year--roughly two tanks of gas depending on your vehicle's efficiency. The banks claim the desperate push for revenue is due to new government regulations regarding how much vendors can be charged for debit-card transactions. The new restrictions on debit-card "swipe fees" are expected to cost US banks $6.6 billion in lost revenue per year. The new rules cap the fee merchants pay to banks each time a customer pays for something with a debit card at 24 cents. In other words, through the newly enforced regulation, the banks are being forced to shift the fees from the merchant to the customer. The so-called Durbin amendment was an attachment to the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Wells Fargo, SunTrust, and Chase have already eliminated debit card reward programs. Citibank is one of the few banks that took a definitive stance against the debit card charge because it realizes doing so will cause customers to be irritated and upset.
The bank's stock prices suffered after the announcements. Bank of America opened at $6.80 on Tuesday and dropped to $6.12 per share during trading on Friday. City National Corp. reached $41.24 on Tuesday before closing at $37.77 on Friday.
The regulation is the latest effort by the government to demonize Wall Street. In reality, these regulations create burdens on business and use taxpayer dollars to enforce.
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