Local banks shun $5 fee

Early next year, Bank of America will charge customers with basic accounts a $5 monthly fee for debit cards.

The local banks see an opportunity.

"The big banks, whenever they come out with something like that, well, we've gotten many calls already this morning," said Donna McKown, senior vice president at Wauchula State Bank. "Some we know were not our customers, many were. But we're telling them, emphatically, we are not charging you for your check card."

It was the same at Highlands Independent Bank. "No," said President John Shoop. "And that no is not forever, but we have no plans at this time."

Bank of America announced its plans on Thursday, and on Friday morning, phones were also ringing at Highlands Independent.

"We got inquiries from customers," said Shoop, "and a lot of people coming from the bigger banks. Their concern is, it's just a $5 charge, but it's still a lot of money."

This summer, the Associated Press-GfK asked bank customers how they would react to a $5 monthly debit card fee: 66 percent said they would change how they do business.

Bank of America is following a trend that is in part self-created. ATM fees are rising, bounced check fees are bouncing higher, and free checking isn't as free as it used to be.

In August, Bank of America launched eBanking, a free checking account for customers who didn't use tellers – or branch services. Or paper. It's $8.95 each time customers bank with a teller or request a paper statement.

Regions Financial, based in Birmingham, Ala., plans to charge a $4 debit-card fee.

SunTrust Bank introduced a checking product in June, said spokesman Hugh Suhr. Everyday Checking has a $5 monthly fee for unlimited debit card purchases.

"The fee is per account, not per card," Suhr said. "If a client chooses not to use the card for purchases and recurring charges during a particular month, there is no monthly usage fee. There is no fee for using the card at a SunTrust ATM. This fee does not pertain to any of our other checking accounts; however, it will also be incorporated into our Student Checking account in March of next year."

"We just don't feel that we have to nickel and dime everybody out there," Shoop said.

* * * * *What's causing higher fees: in 2008, the banking world and Wall Street nearly collapsed; in 2009, the Nilson Report found bank fees generated $19 billion; in 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The effects: Wells Fargo announced its plans to curtail free checking for new customers. Bank of America, one of the world's largest financial institutions, announced it planned to nearly eliminate free checking.

A Bankrate.com study this week found just 45 percent of checking accounts are free with no strings attached, down from 65 percent last year and 76 percent in 2009. Strings include direct deposits and $1,500 monthly balances.

The same study found the average ATM fee rose from $3.74 last year to $3.81 this year. Overdraft fees rose from $30.47 to $30.83.

Starting Oct. 1, new Dodd-Frank regulations capped the fees banks can collect from merchants whenever customers swipe their debit cards. If banks can't collect the money from merchants, they'll shift to obligating their own customers.

Sen. Dick Durbin, D-Illinois, responded Thursday to Bank of America's announcement: "After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to customers. It's overt, unfair, and I hope their customers have the final say."

Not all Bank of America customers will pay. Those with premium accounts are not incurring new fees.

SunTrust's strategy is similar. "Generally speaking, clients can avoid fees with any of the new accounts based on the depth of their relationship with us," Suhr said.

Wells Fargo and Chase are testing similar fee schedules in select states. Does this signal the end of free debit cards?

As small banks fail and big banks take over, there are fewer local banks.

All those customer calls came on Friday morning, said Wauchula's McKown, "because they think what the big banks are doing, we have to follow. Are we feeling the regulatory burden relating to banks? Certainly, but what we're doing is finding a way to manage those costs."