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October 28
Chase, which had been testing a $3 monthly fee, has decided not to introduce a monthly fee for debit card purchases.
Article source: http://feeds.nytimes.com/click.phdo?i=452d688c49627c4821963a3a31446cfc
A Long Island credit union, seeking to capitalize on growing antibank sentiment, is offering new customers guaranteed “fee free” checking accounts — for life.
Bethpage Federal Credit Union says that effective immediately, new customers opening a Bethpage Bonus checking account can be assured of a lifetime of no debit card fees, no monthly maintenance fees, no transaction fees, no minimum balance fees and no fees charged by Bethpage for use of other banks’ A.T.M.’s. Plus, there are no fees for online, mobile or telephone banking.
Really? Absolutely no fees? For life? Guaranteed? “There are no caveats,” Kirk Kordeleski, the credit union’s president and chief executive, said in a telephone interview.
Well, almost none. The fine print on the credit union’s Web site notes in part, “Fees associated with insufficient funds will apply as necessary.” So, yes, there can be at least one fee — if you sign up for overdraft protection and overdraw your account by more than $20 when making a debit card purchase. (That fee, though, is $10 — roughly a third of the typical overdraft fee charged by big banks.)
Making the offer isn’t that big of a leap for Bethpage, Mr. Kordeleski said, because it already wasn’t charging most of those fees anyway.
The move is a savvy marketing ploy by the credit union, which has already seen an influx of new accounts. Since Bank of America announced its monthly debit card fee, the credit union has opened 1,500 new checking accounts — double the typical amount for a three-week period. A special Web site urges consumers to give their banks a “pink slip,” and offers a $25 incentive for turning in checks or debit cards from their old banks.
The checking account offers a 1 percent annual percentage interest rate, as long as customers use direct deposit, use online banking and make at least 15 debit-card purchases a month. Bethpage also offers better-than-average rates on its certificates of deposit. It is currently offering 0.90 percent on a one-year certificate of deposit, and 0.70 percent on a six-month C.D. Bankrate.com says the national averages for those C.D.’s are 0.36 percent and 0.23 percent, respectively.
Membership in the credit union, according to its Web site, is open to anyone who “lives, works, worships, attends school, regularly conducts business in Nassau or Suffolk County, or is an immediate family member of a current member.”
Are credit unions like Bethpage looking more attractive to you?
Article source: http://feeds.nytimes.com/click.phdo?i=91f98102407fd56b18be4c9fb1fcfcad
Bloomberg
Using a debit card for purchases has become second nature to many of us. But now some banks are taking steps that make the cards less attractive, by charging monthly fees for their use with some checking accounts.
The moves follow the heated debate over limiting the “swipe” fees that banks charge retailers for processing debt transactions. Banks say they have to make up that lost interchange-fee income from somewhere — for example, by eliminating debit card rewards programs, and by adding fees on customers for shopping with debit cards.
Wells Fargo, for instance, is notifying customers this month that beginning in October, the bank will test a debit card “activity fee” of $3 a month when a customer makes a purchase or payment with a debit card linked to a personal or business checking account. (ATM transactions won’t trigger the fee.)
The test will affect accounts opened in five states: Oregon, New Mexico, Nevada, Georgia and Washington. The bank said the accounts will continue to carry perks including “card personalization,” which lets you put a photo of, say, your dog on your card. (Gee, thanks.)
“This is one of those ways we are looking at recouping lost revenue,” said a Wells Fargo spokeswoman, Lisa Westermann, in an e-mail.
SunTrust Bank recently implemented a $5-a-month fee for debit card purchases for holders of its basic Everyday Checking account and will add the fee to its student checking account next spring. In any given month, if the customer uses the debit card to make a purchase — either using a signature or a PIN — the bank will charge a single $5 fee. The fee doesn’t apply to use of the card for ATM transactions.
“As I’m sure you’re aware, a debit card usage fee is a growing trend due to changes in the environment in which our industry operates,” Hugh Suhr, a SunTrust spokesman, said in an e-mail.
Regions Bank, meanwhile, now charges a $4 monthly fee for debit card purchases for holders of its basic LifeGreen Checking account and its student checking account, according to the bank’s Web site. (The fee doesn’t apply to ATM transactions and is waived if you don’t make any purchases with the card.)
JPMorgan Chase is testing a $3 monthly fee for a debit card with a basic checking account in northern Wisconsin. (Customers there have three other accounts to choose from that provide a debit card with no fee, according to a bank spokesman.)
Would you cut back on use of your debit card, if your bank charges you a fee for shopping with it?
Article source: http://feeds.nytimes.com/click.phdo?i=a912be158633c3647a83a21e0adfd892
The cap was mandated last year in the Dodd-Frank financial regulation law, but the Fed action was far less draconian than bankers had feared. The new cap of 21 to 24 cents a transaction, down from an average of 44 cents before the law passed, is roughly double the 12 cents tentatively proposed by the Fed last December.
Consumers are unlikely to see any immediate change at the register because they do not pay the fees directly. But merchants have complained that as the cost of debit fees — a charge for processing payments — has risen in recent years, they have had to add it to the prices they charge. The new lower fees may eventually be reflected in lower retail prices for consumers or, most likely, in a slight slowing of price increases. But banks said the caps would not pay for the cost of operating their electronic debit card networks, and they have warned that their customers can expect higher fees for other banking services as a result.
In approving the lower fees, the Fed’s Board of Governors said there was no way of knowing what the effect of the new rules would be, although they will be watching the results closely.
“I think this is the best available solution that implements the will of Congress and makes good economic decisions,” Ben S. Bernanke, the Fed chairman, said in voting to approve the rule. The board voted 4 to 1 in favor, with Elizabeth A. Duke dissenting.
Ms. Duke said her primary concern was about an exemption built into the law that gives smaller banks with less than $10 billion in assets a pass on the fee cap. These smaller institutions could charge retailers a higher transaction fee for debit card purchases.
Ms. Duke and other governors questioned whether and how that exemption would work. The board agreed to monitor the charges, known as interchange fees, to see how the revenues of small banks were affected, and whether merchants appeared to be rejecting cards that they knew would require them to pay a higher processing fee.
The new fee schedule includes three parts: a maximum interchange fee of 21 cents; a 1 cent addition that is allowed if the bank issuing the debit card develops a fraud-prevention program; and a variable charge of 5 basis points, or five one-hundredths of a percentage point, of the value of the transaction to recover a portion of fraud losses.
For the average debit card transaction of about $38, that variable fee would be roughly 2 cents, which would produce an upper limit, on average, of 24 cents a transaction.
The new rules will go into effect on Oct. 1. The Fed will accept comments on the proposal to allow a 1-cent addition for fraud-prevention efforts.
Since the Dodd-Frank law passed last year, lobbyists for consumers and retailers have been butting heads with bankers over the fee-setting process. At one point this month, banks pushed hard for a Senate measure aimed at delaying the fee caps, which was defeated in a floor vote.
Banking trade groups, retailers and consumer advocacy organizations all expressed some dismay at the Fed’s announcement — the bankers because they stand to lose fees and the retailer and consumer groups because the final charges rose sharply from the Fed’s initial proposal.
“While Congress spoke clearly that fee-fat banks can no longer sneak billions of dollars in stealth charges from debit card users, it appears that the Federal Reserve buckled under the weight of the banking lobby,” Bartlett Naylor, a financial policy advocate for Public Citizen, said in a statement.
Mallory Duncan, chairman of the Merchants Payments Coalition, a retailers’ group, called the new rule “unacceptable to Main Street merchants” and said the Fed “very clearly did not follow through on the intent of the law.”
Some banking groups also adopted a glass-half-full position. Frank Keating, president of the American Bankers Association, said the Federal Reserve took “a significant step in reducing the harm that could have resulted from the proposed rule.”
“The final rule still represents a 45 percent loss in revenue that banks use to provide low-cost accounts to our customers, fight fraud and maintain our efficient U.S. payments system,” Mr. Keating said. “Consumers will see higher fees for basic banking services, and banks — particularly community banks — will still feel the revenue pressures that this rule will cause.”
Merchant trade groups said retailers paid $20.5 billion in fees last year to accept debit cards, including processing fees.
Article source: http://feeds.nytimes.com/click.phdo?i=920cadfeb2fecfe480a4c4a62b4e98e3
After weeks of back-and-forth debate and heavy lobbying by banks and retailers, the Senate voted Wednesday against delaying a cap on the swipe fees that stores must pay for the processing of debit card purchases.
The vote means that the Federal Reserve Board will move ahead to complete the cap on the charges, formally known as “interchange” fees, by July 21. The board has proposed rules that would limit the fees charged by banks to 12 cents per transaction, down from the current average of 44 cents per transaction.
What remains to be seen, however, is whether the savings will be passed on to shoppers.
The country’s biggest banks, which earn billions in revenue from the fees, fought hard for a delay or an outright repeal of the cap, which is part of the Dodd-Frank financial regulation law. They’ve warned that they will have to curtail rewards programs and other customer perks, and perhaps generate fees elsewhere, to make up for the lost interchange revenue.
Retailers fought hard to lower the fees.
Consumers, at any rate, have low expectations of receiving any benefits from the change, said Paul Bragan, director of quantitative research at Wakefield Research, which has tracked public opinion on the interchange debate since 2008.
Wakefield’s latest findings show that consumers and voters are much smarter about how debit cards work, and that they’re skeptical that merchants will pass along the savings they get from the new law. “They don’t believe that they’re going to see a benefit when they go to the store,” Mr. Bragan said. In fact, nearly three-quarters of those polled agreed that the prices they pay would not be reduced by merchants and retailers.
What do you think? Is it unreasonable to expect that merchants pass along at least some of the savings to customers, in the form of lower prices at check out?
Article source: http://feeds.nytimes.com/click.phdo?i=613b54e0dd35a0c5c1fc71f4fedf3a8d