Banks Forcing You to Pay Exorbitant Debit Card Fees

Back in June we reported in the article opposite that “something got fixed in this country”. The Senate had blocked an attempt to delay the section of the Dodd-Frank financial reform bill that capped the fees paid to banks when you use a debit card.

Well, that sure was naïve of us. Here’s the gist: The banks tack on a fee every time you use your debit card. You don’t see it; to recover the added cost to everything they sell, the stores have to build the bank charge into the price of what you buy.

It's only fair that the banks get a fee for the convenience of debit cards. But that assumes the fees are fair. To the contrary, the average fee added to every one of your debit card transactions is 44 cents, says the Federal Reserve. On a $50 purchase, it’s 63 cents.

Think of how much money that means you’ve been paying to the banks across a year of purchases, year after year. Yet the bank simply reached into your account and transferred the money to the retailer’s bank account. That’s it. Done. In a nanosecond. Entirely electronic, at miniscule cost (the scheme’s development investment was some 20 years ago). So what does it add up to? How much have the banks charged the public and siphoned out of the economy into their coffers? How about $16 billion a year.

The Dodd-Frank bill clamped down, allowing a maximum fee of 12 cents per transaction. If you are computer savvy about electronic transactions, you will be shaking your head in disbelief that the fee is still so high.

It then turns out that the 12 cents was only the law’s recommendation, because the Federal Reserve ultimately decides such banking matters. So what does the Federal Reserve do? If you have ever been in doubt that the banks have the Fed and the Treasury in their pockets, that doubt will be dispelled when you hear that the Fed stopped in, arbitrarily brushed aside Dodd-Frank and allowed the banks a whopping 22 cents a transaction.

But the banks just can’t stand it that half their $16 billion has still been taken away. They believe they are entitled to your money. We are now seeing that one after another bank is adding a $3 to $5 a month charge for the use of debit cards ؏ and that’s in addition to the fee your pay at the checkout counter.

Fight back. Use paper. Write checks where possible. That really does cost the banks money. Or resume using those green pieces of paper we once carried around with us.