Wells Fargo will test debit card fees in five states
On Oct. 14, Wells Fargo, which holds the second largest number of bank deposits in the U.S., will begin testing a $3 monthly fee for debit cards in New Mexico and four other states. The fee applies to all cardholders and will be triggered if you use the debit card for online or in-person purchases.
The fee applies regardless of whether the cardholder hits “debit” or “credit” on the PIN pad. ATM withdrawals will not trigger the fee. Chase is also testing a $3 debit card fee in Northern Wisconsin.
Debit card us has surpassed usage of credit cards and paper checks, largely due to their ease of use and belief that they are safer than credit cards.
Wells Fargo said it needed to impose the fee because new regulations are cutting into revenues. Banks used to be able to collect overdraft fees from checking accounts — sometimes due to the order of transactions clearing the account or cash being available from a check without it actually clearing — but the Federal Reserve prohibited those fees unless the customer opts in for coverage. The Fed also capped swipe fees at 21 cents per transaction, lower than 44 cents that the banks wanted but more than the 12 cents the Fed said would give them a 70-percent profit margin.
Just as “free checking” is slowly phasing out as banks hike monthly maintenance fees and require higher minimum deposits or direct deposit, it seems that the free debit card could be a thing of the past. However, at least the fee is predictable versus the person who pays $35 for a cup of coffee because they accidentally overdrafted their account.