Alternatives to Debit Card Fees

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Yesterday, the CEO of Bank of America argued that the bank has a “right to make a profit.” They do, in fact, have that right. But that doesn’t mean you have a responsibility to help them with that. If you regularly use your debit card and don’t want to pay the new $5 fee each month you use the card, you have a few options for avoiding the fee:

Switch to Cash

Many people have stopped carrying cash, but cash is still accepted in most places. I won’t say all, because I’ve been in doctor’s offices that couldn’t make change and airlines don’t take cash for in-flight purchases. But, for small, day to day purchases, carry cash. The merchant will be happier and you won’t get slapped with a fee. It might even reduce your urge to make all those small purchases.

Get a Credit Card

Of course, cash might not be appealing if you need to make a large purchase, and it won’t work for online or phone orders. Even if you avoid credit, you might want a credit card for these purchases exclusively. In addition to avoiding the debit card fee, you’ll receive purchase protection. Just make sure you choose a card without an annual fee. Only use the card for large purchases where cash is challenging, or online/telephone purchases. Don’t carry it with you. Then make an online credit card payment for the same amount as soon as you complete the transaction. It’s an extra step, but you won’t get dinged a $5 fee for the privilege.

Choose a Credit Union or Online Bank

Bank of America isn’t the only bank testing debit card fees, so you’ll probably have to avoid traditional brick and mortar banks to avoid debit fees. You can switch to a credit union, most of which belong to extensive ATM networks, or you can switch to an online bank. An online bank as your primary bank shouldn’t be your first choice if you make a lot of ATM deposits, but it’s great for those of you who generally only receive direct deposits, or can wait for deposits to be processed by mail.

While the new debit card fee is annoying, it can be avoided. I do wonder at the wisdom of the big banks doing this. As an NPR commentator pointed out yesterday, it does require effort to change banks if you have direct deposit, automatic debits, and online bill pay, but people will do it if the banks push us hard enough. I only use my debit card to withdraw cash, so I won’t be hit by the fee. But for those of you who rely on debit cards, I think the day will come soon when online banks will have those snazzy check scanning apps, and that might be all it takes to convince many people to leave the big banks.

I wouldn’t expect the fee to go away unless Congress changes the regulations or Bank of America loses customers in droves.

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