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Avoiding New Debit Card Fees

Banks are adding insult to injury by introducing new fees for using debit cards.  It’s not enough that in recent months new fees for checking accounts have been rolled out nationwide, or that in recent years they created a financial mess in the mortgage markets.  Now, they claim that their profits are being squeezed, and they want to pass the bill on to you.  Fortunately, by understanding the background of the new fees and the fine print on how the fees work, you should be able to avoid most new debit card fees and deprive banks of a secondary revenue stream by cutting off their access to your personal data.

Why So Many Fees Now?

The story behind all the new fees in a nutshell boils down to the Obama Administration’s need to show the world that they are “doing something” about the financial crisis facing America.  While many of the nation’s biggest banks committed egregious excesses in the financial crisis, the current regulatory climate is doing more to punish small businesses and consumers than large banks. Every cutback for banks is translating into new fees and pain for individuals.

The biggest example of this and the driving force behind the new debit card fees is the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009.  This law has been enacted in stages, and at each stage consumers have felt an impact.  The most recent change has been capping credit card processing fees at 24 cents, down from the previous cap of 44 cents.  Apparently this will result in such a financial deficit for banks that they have to make up the difference with a monthly service fee for customers who are using debit cards.  All in all, banks are trying to make up for the $10 billion they think they will lose as a result of the new laws.

How To Beat The Fees

Naturally, customers are not pleased with the new fee system for what many feel is an account holder’s right – accessing your own money.  There’s also the aspect of feeling nickel-and-dimed to death by banks.  Paying for paper statements, getting charged for in-person transactions, and monthly service fees are all adding up.  For many, it’s time to make a change. In fact, some banks have already rescinded the fees in the wake of many customers complaining and taking their money elsewhere. In fact, my own bank announced yesterday that they will be refunding the debit card fees to their customers immediately. It’s too late though; my family opened an account at a credit union three weeks ago.

Customers like me who still want to have plastic to swipe may find a way to escape the fees by switching from banking with a large bank to banking with a small bank or local credit union.  The fees are being introduced predominantly by large players, while smaller banks and credit unions aren’t making a move.  These institutions weren’t able to charge 44 cents per transaction in the past, are less reliant on fee income for profits, and spend less money on flashy advertisements, sports team sponsorships, and marquee headquarters buildings.  As a result, they can afford to continue to offer no-fee debit cards.

If you’re not interested in changing banks (because I will admit, it’s a bit of a hassle), one fast change is to switch to using cash.  The fees only apply if you are using your card as a charge card, not when you use it as an ATM card.  Consumers with the discipline to just hit an ATM each week (and not pay ATM fees) and pull out the cash they will need can avoid the fees without having to change banks.

Turning The Tables

Along with saving your own dough by switching to cash, the move back to hard currency for purchases also allows consumers to turn the tables on banks and eat further into their pockets.  Many big banks make significant profits by selling data on customer’s behavior.  This is legal in aggregate form, and explains why you often get coupons that seem eerily similar to recent purchases.

Customer data tracking and reporting is facilitated by using plastic.  Every transaction and the items in that transaction as well as dates, times, and amounts are all spoon-fed into the system … but not if you’re using cash.  Cash anonymizes your purchases, depriving the banks of data they can use for themselves and resell to others for a profit.

The new bank fees are designed to help banks continue to maintain their high profit margins.  However, you don’t have to play along with keeping the fat cats fat.  It is possible to avoid the new debit cards fees and go one further to deprive banks of additional revenue streams.  The banks may nickel-and-dime you, but turning the tables is not out of the question.

©2011 Off the Grid News

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