Instead of rewarding customers for using debit cards, several large banks are starting to charge their customers. On Tuesday it was mentioned in the discussion forum about Wells Fargo's new fee of $3 per month when customers use their debit cards for purchases. This fee starts on October 14 in certain states. Other banks which are adding similar fees are mentioned in this Wall Street Journal article. These include Regions and SunTrust.
Banks are blaming the new debit card interchange fee regulation that takes effect in October. This will cap the fees to 21 cents with an extra 0.05% of transaction price to cover fraud prevention costs. The Fed raised the caps in their final rules that were released in June to ensure all costs were taken into account. Apparently, that wasn't good enough for the large banks.
The caps only apply to large banks with at least $10 billion in assets. There are concerns that this regulation will also impact small banks, but there is still a lot of uncertainty about this. In June PerkStreet Financial's COO said he thought it wouldn't have an effect on their debit card rewards program. I haven't seen the same announcement from banks offering high-yield reward checking accounts. Most all banks offering reward checking accounts have assets under $10 billion.
In an optimistic take on this, perhaps this will encourage people to move their money from the mega banks into community banks and credit unions.
For most of the readers of this blog, the only reason to use a debit card is to qualify for high interest in reward checking accounts or cash back rewards in programs like that offered by PerkStreet Financial. Without those rewards, most readers probably prefer a credit card which provides more protection, cash back rewards and other perks.
Please refer to my reward checking account overview post to learn more about high-interest reward checking accounts.