published Wednesday, August 31st, 2011

Monthly debit card fees taking shape

Pedestrians walk past a CBC ATM off Market St. in downtown Chattanooga early Monday afternoon. New legislation passed by Congress will cap what banks may charge retailers for debit transactions, resulting in a debit card service fee that the bank will charge its customers.
Pedestrians walk past a CBC ATM off Market St. in downtown Chattanooga early Monday afternoon. New legislation passed by Congress will cap what banks may charge retailers for debit transactions, resulting in a debit card service fee that the bank will charge its customers.
Photo by Dan Henry.

Debit fee status report

Bank of America — Examining overall maintenance fees instead of debit card fees

Bank of LaFayette — No current plans for debit fees

BB&T — Examining overall maintenance fees instead of debit card fees

Cornerstone Community Bank — Using lack of new fees to differentiate it from big banks

First Volunteer — Budget checking account includes $3 monthly service charge, personal checking account waives $8 fee if balance stays above $500

First Tennessee — $6 monthly fee on checking accounts starting Sept. 15. Fees may be waived or reduced for students or those with higher minimum balances.

FSGBank — Using lack of new fees to differentiate it from big banks

Regions — $4 monthly fee on some accounts starting in October

SouthCrest — No current plans for debit card fees, examining higher account balance requirements

SunTrust — $5 monthly fee on "Everyday Checking" account since June, and also on student accounts starting in March 2012

Wells Fargo — $3 monthly fee on some Georgia accounts beginning in October as part of pilot program

Sources: Regional bank executives and spokesmen

Big banks are phasing in monthly fees on debit card usage starting in October, while smaller banks are taking a wait-and-see stance before deciding whether to charge customers for bank card purchases.

The new fees are designed to compensate for lost revenues stemming from the Durbin Amendment to the federal Dodd-Frank Act, which slashes in half the amount banks can charge merchants for each electronic transaction beginning in October.

First Tennessee, Regions Bank, SunTrust and Wells Fargo are testing fees ranging from $3 to $6 on certain accounts, officials say, a reversal from the era when free checking and complimentary debit cards were the norm.

"For those accounts with a monthly debit card fee, it will be assessed when at least one point-of-sale transaction is made with that card during a statement cycle," except for ATM withdrawals, said Mel Campbell, media relations manager for Regions Financial Corp.

Meanwhile, smaller community banks like Chattanooga-based Cornerstone Community Bank and the Bank of LaFayette may be able to avoid charging the fees, thanks to an exemption in the Durbin Amendment for small banks with less than $10 billion in assets.

"I think what you'll see, at least at this bank, is us keeping things the way they are to try to bring customers to the community banks from the regional banks," said Frank Hughes, president and CEO of Cornerstone Community Bank.

These smaller banks can still collect the full amount from merchants, so there's theoretically no need to turn to customers to make up the difference.

But there's a catch: the electronic payment networks like Visa and MasterCard to which smaller banks subscribe -- the physical servers, switches and routers -- were built and are owned by the big banks.

"Nine times out of 10, when they do stuff like this it trickles down," said Blake Strickland, president and CEO at the 92,000-member Tennessee Valley Federal Credit Union. "I fully expect to see some kind of ramification from it."

On one hand, Strickland said that the Visa and MasterCard networks have informed him that they should be able to differentiate between electronic traffic from small banks and big banks.

But until the new rules take place in October, community banks are holding their breath, said Larry Kuglar, board member and former CEO of SouthCrest Financial Group.

"We'd prefer not to add a lot of fees to our accounts," Kuglar said. "We'll have to first see what kind of effect it will have on earnings and income."

For larger banks that say they aren't charging new debit fees, like Winston-Salem, N.C.-based BB&T, customers may instead see new requirements for minimum account balances or direct-deposit usage in order to avoid monthly $10 maintenance fees, said BB&T spokeswoman Merrie Tolbert.

Bank of America, too, is emphasizing overall maintenance fees rather than debit fees, with "new pricing changes in 2011," said spokeswoman Christina Beyer.

"The services we provide are valuable, and some special services result in additional costs to us -- costs that we are simply passing on to the customers who use them," she said.

Most banks agree that typical customers will be able to avoid the fees, debit or otherwise, through self-service banking, making monthly direct deposits or keeping larger account balances.

For customers who don't want the hassle of juggling account balances, there still are free checking accounts available in the region, with few caveats.

FSGBank offers fee-free debit card accounts with no maintenance charges at its 37 branches, said Gina Crumbliss, FSG marketing director.

"The bigger banks have sent out letters saying there's not going to be any more free checking accounts," she said. "But we're not going with that trend."

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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Humphrey said...

how do you accidentally hit a "t" when you are going for the "s?"

August 31, 2011 at 7:43 a.m.
Astropig said...

Here's an easy workaround for this:

1) Go to to Ally.com. Open a checking account there. Its free and you can link it to your account at these greedy "bailout banks".

2) They will send you a debit card that is a visa card like you already use. No difference except the name on the front.

3) Lock your "bailout bank" card away in a drawer someplace. You won't need it anymore.

4) Ally refunds greedy "bailout banks" ATM fees at the end of the month. Using any ATM in America will cost you nothing.

5) Tell your bank to stick that card fee where the sun don't shine.

There. You now have a step by step plan for beating these crooks at their own game. You'll be cutting of some of their oxygen (debit swipe fees) and sending the messsage that you have choices and will use them.

Good Luck !

August 31, 2011 at 7:44 a.m.
harrystatel said...

Banks-The Official Bedbugs of the U.S. Bailouts. Our new slogan-"We Suck Thanks to the Government."

Willie Sutton is no longer an outsider. He runs the banks.

August 31, 2011 at 8:31 a.m.
Diskatopia said...

So banks are going to charge for something that is cheaper for everyone involved than using/processing checks?

Pretty obvious moneygrab using the new regulations as a cover, otherwise they would charge for the labor-intensive processing of checks instead.

.

August 31, 2011 at 9:10 a.m.
pgoldberg said...

Astropig: the $13b ally got from the government for acquiring GMAC wasn't a bailout?

August 31, 2011 at 9:42 a.m.
Diskatopia said...

"Besides, the merchants didn't need protection from big transaction fees"

In reality, we all need protection from fees charged by card processors, banks, and Visa/MC/etc., because these fees amount to a roughly 1-3% price increase on everything one purchases at any business which accepts credit cards, whether one pays cash or not, as the card companies do not allow businesses to charge the fees directly to credit card users.

Because of the card comapnies not allowing the exact fees to be passed on to just those who use the cards, it basically amounts to credit card company tax on everyone, and most people do not realize it because the never see the fees (3.2% + $0.30 per transaction for my business).

August 31, 2011 at 9:43 a.m.
Astropig said...

"Astropig: the $13b ally got from the government for acquiring GMAC wasn't a bailout? "

Yes it was!. But since you're paying the freight anyway ,why not save a few bucks a month for your use,rather than giving it to Regions or SunTrust ?

Basically, our government printed the money to bail out Ally (and the other banks). That bill will never be paid. It will be inflated away over the next however many years.But...

The money that you do not have to pay Regions et al is money that you can use for your benefit today.

I guess the question is : Do you want to have that money or do you want to give it to a banker?

August 31, 2011 at 9:54 a.m.
Johnnie5000 said...

TVFCU didn't get a bailout... and they're also awesome. Just sayin.

August 31, 2011 at 11:20 a.m.
justaperson said...

Why is everyone ignoring the obvious. Just shred the debit card and use cash instead. Stop the trend to a cashless society AND, there will be NO bank fees....

August 31, 2011 at 11:24 a.m.
Astropig said...

"Why is everyone ignoring the obvious. Just shred the debit card and use cash instead. Stop the trend to a cashless society AND, there will be NO bank fees...."

...A good idea. Or use checks (which have no fees attached).

The point is, you shouldn't have to pay money to spend money.

August 31, 2011 at 11:27 a.m.
ms1824706 said...

Why is everyone ignoring the obvious? These banks are NOT "not for profit" organizations. If you dont like the fees go to somewhere such as Ally, where all you have is the internet and a 1800 number. For those of us that like to have a relationship with the people that are holdoing our money as well as the convenience then you are going to have to pay for it.

On another note it would be a cold day in he** before i do business with a company that does not give back to our immediate community when i have a choice.

Everyone has their opinion...

August 31, 2011 at 4:38 p.m.
harrystatel said...

Go by FSG Bank downtown on Market Street. Ask to see the bailout money. Ask about Roger Dodger's 2 million dollar parachute while the bank went red under his "leadership."

Aren't you glad to help Rodger get his money? Tell Rodger you want to hold $100.00 of your taxpayer money. Oh, but Rodger isn't there anymore, but he still gets a free ride in the parachute you've paid for.

Why rob banks with a gun when you can do it from the inside with bad paper, "friendly" loans to friends, and taxpayer bailouts?

That's what happens when there's no competition due to government laws and regulations that favor banks, Wall Street, and corporations. That's also not free markets or capitalism, but fascism.

So a hardy "Sieg Hiel" to the banks! And ask about the free checking!

August 31, 2011 at 5:15 p.m.

The pilfering of those who have enough money to have a bank account underscores how desperate these times have become.

In God we Trust, yeah right, more like In Banks We Trust, or In Money We Trust, as money has become the new God to our Bernays-Consumer-America.

It is a conundrum: if it were feasible, everyone would pay their bills using cash, but since a bank account is required to pay all but the most paltry of bills, the banks corner us.

Welcome to what you have created, or more precisely, what you have allowed to be created: Ben Franklin famously said, "those that give up their liberty for security, deserve neither."

August 31, 2011 at 8:21 p.m.
Astropig said...

"Why is everyone ignoring the obvious? These banks are NOT "not for profit" organizations. If you dont like the fees go to somewhere such as Ally, where all you have is the internet and a 1800 number"

As opposed to Regions, where you couldn't talk to a "local" banker if your life depended on it. Their 800 number rings in Memphis.They could give a damn about the community that we live in.

Also about the "relationship" that you speak of...We have the same "relationship" with banks that a dog has with fleas.

One more thing. "Free" checking was never free as we understand the term. The cost of checking when it was "free" was borne by people that went overdraft on their accounts. If that was you, your checking cost you plenty. If you bounced three checks in a year, you were really paying $8.75 a month for checking ($35 fee X 3 = $105 / 12 = $8.75).In essence, you are now sharing the cost of all of the bad check fees out there because the bank can't rip off one group of customers to subsidize another.

August 31, 2011 at 8:50 p.m.
memphisexile said...

I have to agree with Astro. The banks provide you with a check card service. Providing this service is not free for them. It is also not mandatory for you. Banks do not owe their customers free checking, a free check card or free ATM withdrawals. All they owe a customer is the promise that their money will be safe and available for withdrawal. It was not too long ago (late 90's if I remember correctly) where none of these things were free. Go to the bank during business hours to withdraw cash and avoid these pesky fees. Most banks are open on Saturday now as well. If that is not convenient for you, you might have to pay extra for the convenience of a check card or an ATM withdrawal. A good way to avoid this is to get a credit card, pay for everything with that and then pay your credit card bill in full online out of a savings account. Problem solved.

August 31, 2011 at 10:58 p.m.
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