Bank of America to charge $5 monthly debit card fee

Get ready for a new wave of bank fees.

Bank of America will begin charging a $5 monthly fee at the beginning of next year for customers who make debit card purchases.

Whether you use your card for one purchase a month or 20, you will pay $5 per month starting in 2012. It doesn't matter if you select "debit" or "credit" at the point of sale.
If you don't use your card at all, you won't be assessed a fee, and you can still use ATMs as much as you want without getting hit with the new charge. Plus, customers with certain premium accounts will be exempt from the charge.Other banks have been flirting with the idea of introducing a fee for debit card usage, but Bank of America is one of the first major institutions to announce that it will make this a reality for active debit card customers.
The move coincides with the implementation of new rules limiting the revenue banks will be able to get from merchants. Beginning this weekend, a cap on the fees banks can charge retailers every time customers swipe their debit cards will take effect.While banks used to charge an average fee of 44 cents, now the maximum fee is only 21 cents. This is expected to cost the banking industry billions of dollars. The Federal Reserve introduced the cap this summer, despite protests from many financial institutions.
"The economics of offering a debit card have changed with recent regulations," said Bank of America spokeswoman Betty Riess, adding that customers will be notified of the change at least 30 days before it takes effect.Last month, Wells Fargo (WFC, Fortune 500) said it will test a $3 monthly fee in Georgia, New Mexico, Nevada, Oregon and Washington beginning Oct. 14 for customers who use their debit card for purchases.
At the end of last year, JPMorgan Chase announced a similar test, in which it charged customers in northern Wisconsin a $3 fee for using their debit cards. A Chase spokesman said last month that the tests were still underway.
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But Senator Dick Durbin (D-Ill.), who introduced the swipe-fee cap in an amendment to the Dodd-Frank financial reform act, said the cap simply evens out the playing field for retailers because the fees Visa and MasterCard had set for banks "grossly exceed the cost of processing a debit card transaction by some 400%."
"After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers," Durbin said in a statement Thursday. "It's overt, unfair and I hope their customers have the final say."