The Death of Free Debit Cards and Checking Accounts?

Big banks have begun hitting consumers with fees, and this is just the tip of the iceberg.

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Two recent developments in the world of finance may be related. Last week, Bank of America announced it would begin charging customers $5 a month to use its debit card. This week, the Occupy Wall Street protest has intensified as it spreads across the country. While the protest is about a lot more than a $5 fee, at its core is a resentment of big corporations that are seen as profiting at the expense of the rest of us. But perhaps the protesters should occupy Capital Hill, not Wall Street.

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Last year, congress passed and the president signed the Dodd-Frank financial reform bill. In the legislation was a provision that empowered the Fed to limit the fees banks charge retailers each time a customer uses a debit card. Known as the Durbin Amendment after Illinois Senator Dick Durbin,  who hatched the idea, the provision affects banks with more than $10 billion in assets. The cap on fees does not apply to smaller banks, prepaid credit cards, or traditional credit cards.

In June, the Fed used its newfound power to cap fees on big bank debit cards to $0.21 per transaction. That represented a more than 50 percent decrease from the average transaction fee charged before the Durbin Amendment. In theory, retailers were supposed to pass these savings on to consumers--at least that’s what some politicians claimed. In reality, there is no sign retailers have lowered prices, and big banks have begun hitting consumers with fees.

The $5 fee to use a B of A debit card is just the tip of the iceberg. Other banks have already begun assessing debit card fees, including Chase and Wells Fargo. And Citi just recently announced increases in the minimum balances required to avoid a $15 monthly checking account fee.

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Fortunately, there are ways to sidestep these fees. For example, there are still some banks that offer no-fee checking accounts. If your bank begins charging for debit card use, you can switch to using a credit card and paying off the balance in full each month. The Durbin Amendment did not affect credit cards, and many no-fee credit cards offer significant rewards.

Regardless of the approach you take, the key is to be on the lookout for sneaky bank fees. Notice of these fees often comes in the mail, and in the hustle and bustle of daily life, it’s easy to miss these notices. And if nothing else, be sure to scrutinize your monthly bank statements to see what fees your financial institution has withdrawn from your account.

DR is the founder of the popular personal finance blog, the Dough Roller, and author of 99 Painless Ways to Save Money.