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New Wells Fargo “Debit Fee” Likely to Hurt Poor The Most

New Wells Fargo “Debit Fee” Likely to Hurt Poor The Most

 

Banking giant Wells Fargo has announced that in response to new federal guidelines that limit the amount that they can charge retailers per debit and credit card transaction, they will instead pass the lost revenue onto consumers by charging a $3 a month fee to customers who use their debit cards. The program, which will be tested out in Washington, Oregon, New Mexico, Nevada and Georgia, is expected to eventually expand to all states.

The fee will be exempted from checking accounts that either have direct deposit of funds or maintain a high minimum balance, meaning that the fees will mostly apply to those who are less secure financially, may not have steady income or have moved from job to job, or are attempting to live on a primarily cash basis.

For millions of Americans who have been struggling during the recession, debit cards have become a lifeline as they have either lost access to credit cards through bankruptcy or overextended credit, or do not have access to a credit account in the first place due to low credit scores, job loss or other financial difficulties.  Once more, the banking industry, in order to keep their own profits up, are relying on fees and payments from those who simply don’t have access to any other means of banking, knowing that they have no choice but to pay.

Wells Fargo, along with other banks, blame the increases on the government for no longer allowing them to have such punitive overdraft fees or being able to dramatically increase interest rates of customers who bounce a check or are late on a credit card payment. They expect to use this fee increase to recoup 50 percent of their losses via regulation of swipe card fees and overdraft charges.  Banks made $1.77 billion in just overdraft charges per year prior to the new regulations.

 

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148 comments

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4:08PM PST on Nov 16, 2011

I saw that debit card fee proposal coming in February of this year, and called and e-mailed my legislators and signed petitions trying to fight it. In June, Congress passed the bill allowing it anyway. I suspected that banks would seize the opportunity to slap on additional fees.

In July SunTrust sent out notices, that as of Nov 10th, checking accounts would be recategorized as Everyday Checking accounts and new regulations would apply,including minimum daily collected balances and monthly maintenance fees of $7, as well as the $5 debit card fee.

If you set up an automatic transfer of at least $5 per month from your checking account into your savings account, you have been exempt from a minimum balance requirement. I assume that still applies. But the new regulations say that you must either maintain a $500 minimum balance or a monthly payroll direct deposit of a minimum of $100. I meet the direct deposit requirement, so the $7 fee doesn't apply. But there seemed no way around the $5 debit card fee.

But as of Nov. 2nd, SunTrust took note of the writing on the wall, the threat by large numbers of depositors of switching their accounts to credit unions, and their banking competition's dropping of the debit card fee. SunTrust just posted a notice that the debit card fee has been dropped. :)

5:37AM PST on Nov 16, 2011

It was First Fidelity, Wachovia, and now Wells Fargo. We opened the account when it was First Fidelity and stayed with it as Wachovia (total of about 30 years). It was convenient; we were always treated nicely; there were no fees; we had direct deposit. They offered us a home equity line of credit at a good rate, and we signed up. Now comes Wells Fargo. I closed an account at Chase because Chase added fees and stayed with Wells Fargo, even though a customer service employee at Chase told me I was not going to like Wells Fargo. She was right. Now I don't like either of them! There's still the credit union that I've had for 10 years. I'm still liking them.

4:42AM PST on Nov 16, 2011

There are plenty of local banks and credit unions that don't charge all these fees.

2:25AM PST on Nov 16, 2011

Thanks.

4:18PM PDT on Oct 20, 2011

If my bank starts charging for use of my debit card, bye bye bank. I'll go back to using cash for everything and no debit card. Enough is enough with banks, big business, oil companies, credit card companies and similar businesses.

8:04AM PDT on Oct 4, 2011

Wells fargo, if you charge this fee, it's see ya lata.

6:36AM PDT on Oct 4, 2011

Check out your local credit unions. The large banks do not appreciate the fact that without you and I, they are out of business. They already take advantage by not giving you access to your money for 24hrs to 5 days, depending on the deposit you make. The Fed rules clear checks at midnight, daily, yet the banks are still floating "out of state" checks. That gives them free use of your money. Case in point, I opened an acct with BOA in NY, when I was in the process of moving the GA, I got a check from a local GA municipality. I went to BOA in GA to deposit the check and they told me they would hold the check 5 days. Why? Because I opened my acct in NY so technically I was depositing an out of state check. You are kidding me right? was my answer to the branch manager. I tried to close my accts right then and he told me I couldnt, because, you guessed it, I had to be in NY. They make profits on loans, consumer and commercial, get interest overnight from the fed, interest on credit cards. These bogus fees are just another way of saying "we have the power, you are nothing". Go somewhere that you are appreciated, go to a credit union.

6:51PM PDT on Sep 18, 2011

So unfair! No way would I pay to use a debit card to access the money that I earned!

5:52AM PDT on Aug 31, 2011

Another greedy corporation, robbing from the poor and giving to the rich.

3:04PM PDT on Aug 27, 2011

They also have lousy service. Everyone should bail out of Wells Fargo and be done with them and any other bank that tries this.

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