Banks continue to search for ways to replace revenues reduced by the debit card fee cap mandated by the Durbin Amendment of the Dodd-Frank act. As a result, customers will also be searching for ways to eliminate or sidestep new fees levied by banks for use of debit cards for purchases.
What’s the least-friendly piece of plastic in your wallet? With Bank of America’s recent announcement that they will start charging for debit card use, upset customers might say there’s a strong argument it’s the debit card – and increasingly, there are better alternatives.
The change in debit card terms has been gradual. Most recently, Bank of America announced its plans to levy a $5 monthly fee for making debit-card purchases starting next year. Banks including Wells Fargo, SunTrust and Chase have already eliminated debit rewards programs, and Chase, PNC and TD Bank are testing ATM fees as high as $5 a pop in some markets.
Credit cards can often be a better fit. Consumers who pay off their balances in full avoid expensive interest charges and fees, often while earning rewards of 1% or better. And as recent data breaches have highlighted, credit cards offer better protections than debit cards in the case of fraud or theft. (When debit cards are stolen, consumers risk losing everything in their checking account if they don’t report the theft before the card is used.)
Customers may be increasingly receptive to alternatives to being charged for debit card use, including the increased use of credit cards (and taking advantage of their reward program perks), prepaid cards, the increased use of cash and checks, and in some cases, a review of whether they should change FIs.
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