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Bank of America to charge monthly fee for debit purchases

September 29, 2011 12:00:00 AM PDT
Brace yourself for another bank charge: Bank of America is going to charge its customers a new fee for using its debit cards.

The new fee will be $5 per month. Although the new fee doesn't start until early next year, Bank of America customers are already unhappy about it.

Swipe that debit card at the grocery store or at a store in the mall or ro any other purchase, and it will cost you $5.

Bank of America plans to start charging its customers early next year, but it is not the first bank to charge a debit-card fee. Chase and Wells Fargo have already been testing it out in select markets. But B of A is the biggest.

"When the big boys charge those fees, it's more impactful. It reaches a lot more people," said Greg McBride, a senior financial analyst with Bankrate.com.

McBride says the banks will soon be making less money from merchants whenever a customer uses a debit card and that's the reason for the new fee.

"Starting this Saturday, the revenue that banks get every time a consumer swipes their debit card is going to be cut almost in half, and while that's certainly been beneficial to merchants and retailers, the consumer's the one that's going to get stuck with the bill," said McBride.

McBride's suggestion is to use your credit card instead of your debit card. It's safer anyway. But make sure to pay it off every month.

"A lot of smaller community banks, credit unions and online banks are viable alternatives for both free checking and free debit cards," said McBride.

"It makes me wonder what's next because they're trying to implement any sort of fee, and I think it's ridiculous," said Burbank resident and B of A customer Greg Tapscott. "I think it's a very greedy practice."

There is good news here in Los Angeles. Other fees that banks charge are the lowest in the country, according to a recent Bankrate survey.

For example, the national average for non-sufficient fund fees is $30.83. L.A. is tied for fourth-lowest in the U.S. at $28.89.

And the national average charge by a bank to use another bank's ATM is $1.41, but in Los Angeles it's only $1.05, the lowest in the country.

The $5 fee doesn't start until some time early next year, and the charge is only applied when you make purchases, not if you use the debit card at a Bank of America ATM.

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