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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