Tags: BofA | Monthly | Fee | Debit | Customers

BofA Plans to Charge $5 Monthly Fee to Some Debit-Card Users

Thursday, 29 Sep 2011 12:39 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Bank of America Corp., the biggest U.S. lender by assets, plans to announce a $5 monthly charge for some debit-card users to recoup revenue lost after new federal rules capped so-called swipe fees.

Some bank customers with basic checking accounts who use debit-cards for purchases may start getting assessed the fee in January, said Anne Pace, a spokeswoman for Bank of America. Users won’t be charged for cash-machine withdrawals, and clients with premium accounts, including those linked to the Merrill Lynch brokerage, won’t be affected, she said.

Bank of America, based in Charlotte, North Carolina, is joining rivals including JPMorgan Chase & Co., Wells Fargo & Co. and SunTrust Banks Inc. in rolling out new fees for debit-card users. The Federal Reserve’s rules limiting swipe fees, or interchange, take effect next month.

“The economics of offering a debit card have changed with recent regulations, and we’ve decided to introduce a monthly fee for customers who use their debit cards for purchases,” Pace said.

The Fed capped debit-card swipe fees at 21 cents starting Oct. 1. It will let issuers tack on five basis points, or 0.05 percent, of each transaction, or almost 2 cents based on the average debit purchase of $38, and a conditional 1-cent adjustment for lenders that follow certain fraud-prevention standards.

Revenue Impact

The cap, mandated by the Dodd-Frank Act, replaces a formula that averages 1.14 percent of the purchase price, or about 44 cents. The limit may reduce annual revenue at the biggest U.S. banks by $8 billion, data compiled by Bloomberg Government show. Swipe fees for credit cards, which aren’t regulated, equal about 2 percent of the purchase price and generate about $40 billion a year.

Earlier this year, Bank of America introduced new checking accounts where users pay fees unless they keep minimum balances, make regular deposits, use credit cards or take advantage of online services.

© Copyright 2014 Bloomberg News. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
You May Also Like
Around the Web
Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved