What to do About the Bank of America’s New Debit Card Charge

The Bank of America says that in 2012 it is going to start charging $60 a year if people want to use their debit cards for purchases. What should you do?

Bank of America LogoThe answer is easy: don’t use a debit card from the Bank of America. In fact, don’t even get one.

Regardless of how much the BofA — or any bank — decides to charge for debit card use, I suggest that you don’t use ANY debit cards. Debit cards are not consumer-friendly cards. Sterck Kulik O’Neill wrote about the problem one of our team members had with a fraudulent charge on a debit card in a May newsletter (and see the gory details in his blog).  We also linked to news stories outlining how risky debit cards are.

Basically, debit cards don’t have the legal protection that credit cards do.  If you qualify for a credit card, then use the credit card instead of using a debit card, and pay the balance off every month.

Compounding the weakness of debit cards, the Bank of America wants to charge you for using this inferior payment tool.  Paying makes ZERO sense, especially since banks make a lot of money from merchant fees when their cards are used.  (A new Federal law limits how much banks can charge merchants for debit card use, but the charge is still way more that the bank’s cost per transaction.)

Just say NO.  No to using a debit card from Bank of America or from anyone else.

Fall back position:  if you are going to ignore the suggestion to abstain from debit card use and you don’t like BoA’s proposed charges, it’s probably time for you to sit down and figure out how much you’re willing to pay for convenient banking. Don’t stop at ATM fees.  Get all the information out on the table.

All of the major banks are on a fee binge.  Wells Fargo announced a $15/month fee on some previously free checking accounts, and Chase is piling on fees, too.

These institutions have ATMs on every city block and branches in your grocery store.   All of that infrastructure comes at a cost… to you! If you don’t like the fee options and decide you can live with less convenience, investigate using a smaller regional bank or else sign up with a credit union. A smaller bank or a credit union may not charge for your accounts or debit cards, but they don’t have the ATM network or so many branches.

Only you can decide if $5/month or $15/month is a reasonable charge for the large bank’s convenience.  Before you leap because of an ATM fee or other single charge, look at the whole picture of what your bank wants from you each month.  If you decide to switch, Consumers’ Report has online tips, including a PDF checklist of steps to follow when you move your account.

About Geoffrey

Geoff is the partner who leads Sterck Kulik O'Neill's administration and applied technology practices. He also works on tax, business development, and general accounting issues. He holds a Bachelor of Science degree in physics from Harvey Mudd College. Geoff's scientific methodology training aids him in helping clients use technology to meet their accounting and business development needs. He joined the firm in 1986.
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