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Last week, Bank of America announced that it would begin to charge $5 a month for customers who used debit cards for purchases. Starting this month, Bank of America joins SunTrust and Regions Bank in charging debit card users, with Wells Fargo and Chase also testing debit card fees in certain states. So far Bank of America will only charge the fee to customers who use their debit cards, so checking customers who have a debit card but don’t use it will not be charged.

Many consumers in recent years have moved from using credit cards for purchases in favor of debit cards. Because debit cards are directly linked to the money in your checking account, using a debit card for purchases has traditionally helped curb unnecessary spending. With the new fees, many consumer advocates fear that spending will revert to credit cards. They warn that since credit cards charge interest for balances that aren’t paid in full by the end of the billing period, switching from debit to credit may tempt some to not pay off their full balance, causing interest charges to accrue.

Overall, a recent study conducted by bankrate.com showed that debit cards aren’t the only fees banks are implementing. According to the annual report, all kinds of bank fees have hit new highs. This includes higher fees for bank ATMs used by customers of other banks, higher fees for bounced check, and banks charging fees for “free” checking accounts that don’t maintain a certain balance or have money direct deposited into the account.

With banking fees on the rise, it’s important that we as consumers take note of what our banks are charging us. Here are some things you can to do avoid getting slammed with fees from your bank:

• Review your bank account’s current fee policies – Make sure you know what your bank is charging you for, and how much. The only way you can successfully avoid getting charged fees is by fully understanding what services your bank has agreed to provide to you for free, and what services it will charge you for.
• Don’t use “out-of-network” ATMs – Only use ATMs belonging to your bank. If that isn’t a viable option, you can also consider finding a bank that uses either a network of ATMs or reimburses you for ATM fees from using out-of-network ATMs.
• Consider switching to a bank that doesn’t charge fees for debit card usage – While many larger banks are starting to implement these fees, many smaller local banks and credit unions still offer no fees for using your debit card on purchases. Some banks even reward you for using your debit card!
• Don’t switch all your debit card purchases to credit card purchases – Credit cards charge interest for balances that aren’t paid in full after the end of the billing period. Try to limit credit card use for purchases that you know you can pay off. You should also find low-interest credit cards for purchases that you plan to finance over a longer period of time.

Sources: http://bucks.blogs.nytimes.com/2011/09/29/banks-adding-debit-card-fees/

http://bucks.blogs.nytimes.com/2011/09/28/fees-fees-everywhere-higher-bank-fees/

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