Zacks_Analysts' Blog : Are Banks Charging You on the Sly? - Analyst Blog

Here’s a word of caution before your next banking transaction: Major lenders will not charge you for every debit card swipe, but they have already designed other new fees on your regular banking activities. In fact, banks have started imposing several of these fees silently, after their plan to recover interchange fee-related revenue losses by imposing debit card fees flopped.

Though these fees have not yet been implemented by all the big banks, we see them lurking right around the corner.

After a hostile response from consumers and lawmakers nationwide, banks backed away from charging customers for the usage of debit cards. Little did we know that meanwhile, the banks were stealthily working out alternatives to avoid revenue losses from debit interchange fee (proposed by the Durbin Amendment) effective October 1.  

Let’s have a quick look at some of the new fees.

If a customer wants to replace a lost debit card of Bank of America Corp. (BAC), the charge for rush delivery is $5 to $20.

U.S. Bancorp (USB) is charging 50 cents a check for depositing money with a mobile phone.

Starting December, TD Bank will charge $15 for each incoming domestic payment for cash wired to a customer’s account.

This month, Citigroup Inc.’s (C) basic checking account charge jumped to $10 per month from $8. JPMorgan Chase & Co. (JPM) has also initiated a standard checking account fee of $12 a month in February.

Also, earlier this month, executives of several large banks including SunTrust Banks Inc. (STI), BB&T Corp. (BBT) and Fifth Third Bancorp. (FITB) said that it is difficult to find a solution to recoup lost revenues as the new federal rules restrict banks’ ability to charge merchants whenever a card is swiped. Probably increased use of prepaid and credit cards could help them to some extent.

Eventually, the big banks intend to shift their costs to customers. What’s even worse is that the means of doing so remain unknown and unspoken about. Many consumers may not even realize what awaits them. Even if they do, there won’t be much that they can do avoid the jolt if they carry on their regular banking activities.

In Conclusion

The Fed was desperately looking for a way to stop the large banks from earning extraordinary profits in the interest of the people. The idea was to infuse the money from the banks to the markets through consumers, thereby increasing consumption and ultimately fueling economic growth.

With the imposition of debit card usage fees by banks, the main purpose of slashing interchange fees would have been defeated as the cycle of cost shift would have eventually fallen on consumers’ shoulders. The scrapping for debit card fees was definitely good news. But there’s nothing much for the Americans to cheer about. It’s quite clear by now –– the banks will surely shift the cost to consumers either by hook or by crook.