Much to your credit...or debit

Written by Administration | 11 October 2011

From the streets of America to the floor of Congress people everywhere are taking a proverbial swipe at the new BofA debit card fees. Sen. Dick Durbin, who no doubt considers himself a modern day Paul Revere for sounding the alarm, "The Debits are coming!", has called for the heads of the heads of the big bank. And angry mobs are using their fees to buy office supplies, taking to the streets to voice their displeasure.

I understand both sides really, why should consumers be charged to use their own money by institutions who use that money to make a profit in the first place? And how many fees can they possibly charge us?

In defense of the banks, they were simply trying to increase profits in a difficult climate.  After a tough series of losses in the housing market and tightening lending standards, money is drying up in the industry, layoffs have begun, and the bank needed to try something.  So, much like with the up to $30 billion made by the banks in credit card and loan late fees, overdraft fees, etc., they thought lets just tack a harmless little surcharge on to everyone's bill. I would imagine that Bank of America really didn't consider the literal brown stripe that would be put on their company image if that added a simple $5 a month fee for using your debit card. Unfortunately, anarchy took over, locusts, end of days...blah blah.

What does this mean for any of us really?  In a generation where we spend five dollars on a cup of coffee without batting an eye, is this really where we are drawing the line in the sand?  What should you do to protect yourself if this does affect you?  More legislation isn't the solution or more tax on the bank, costs they will just pass along to the consumer one way or another anyway. Maybe if you don't like it you could change banks.  That is until other banks follow suit, like SunTrust, who is scheduled to add a fee of their own on come November 10, 2011.  But what about Wachovia, BBT, Wells Fargo, et al?  That is the point here.

In the free market system, the banks are free to try to make a profit and we are free to make a choice.  When banks started adding checking fees on accounts, the big draw became, "Come to our bank for FREE checking." Someone, somewhere will offer a solution and everything will be okay...or maybe you could just not use your debit card.  I would also suggest not using your credit card.  The freedom theme here is that you are free to make choices about your day-to-day finances.  To swipe or not to swipe, where to house your money, and what fees your are comfortable paying to access and use your own money.  Take charge of your money. Read your statements every month on every account and know that you are comfortable with what you are paying. If not, move on down the road, I'm sure someone will be happy take your money.

And Canada, be careful, this is one American trend that you won't want to follow.

DM