New Mexico getting Wells Fargo pilot usage fee
Banking inconvenience is scaling to new heights in New Mexico and across the country as Bank of America and Wells Fargo plan to roll out separate monthly debit card usage fees. In New Mexico and in four other states, Wells Fargo will pilot a usage fee of $3 a month beginning October 14.
By assets, Wells Fargo is the second largest in the country, trailing Bank of America, which will roll out a $5 a month usage fee that will affect most accounts, save a student program and two premium accounts Premium and Platinum Privileges that require $20,000 and $50,000 in holdings, respectively.
While Citibank announced it’ll hold off on adding new charges to its customers, JPMorgan Chase & Co. and SunTrust Banks have rolled out their set of fees this past year.
Bloomberg explains the impetus for the new charges:
The [Federal Reserve] 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 fraud-prevention standards.
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.
In general, banks are finding new methods of warding off low-value customers who use savings accounts but avoid higher yield financial services. With economists stoking fears of a second dip into recession throughout the summer months, commercial bank holdings have increased at blistering rates due to individuals in search of a safe place to park their money.
However, with every new dollar under a bank’s management, that’s additional federal fees the bank has to pay, like deposit insurance premiums, also known as FDIC. And with interest rates near zero, and a dearth of expensive loans being issued, the financial firms have little to gain from the additional holdings. During the financial boom years preceding the economic collapse, banks were hungry for cash holdings to better leverage the high number of mortgages issued.
But, it’s not all bad news: Earlier in September of this year, the magazine Working Mother identified Bank of America, the second largest bank in New Mexico, as one of the top employers for working mothers.