Why You Should Know the Different Debit Card Fees

More people are using debit cards than ever before and it seems only inevitable that at some point in the future electronic swiping will completely replace cash. This reality can’t come soon enough for banks, who frequently hike fees on debit and credit cards, account balances, and transaction fees to garner larger profits. Yes, don’t forget, banks are for-profit. And remember that when you swipe your debit card and purchase that pair of cheap sunglasses, the $9 price tag isn’t the final price you’ll be paying, and I’m not referring to the tax. Here are three ways banks charge you simply for spending your own money:

Transaction fees—All debit cards charge the card holder small fees when they are used on transactions. The cost of these fees depends on a combination of the financial institution that issued the card and the merchant from whom you are making the purchase. As of 2011, Visa and Mastercard were planning to significantly raise their merchant fees, from 8 cents on a $2 purchase to 23 cents, which is only a cent less than the legal limit. Other companies are expected to follow suit.

Account requirements—Another way banks are able to make a few extra bucks off their account holders is to increase the minimum balance requirements and attach corresponding feeds. CitiBank, for example, has effectively eliminated their EZ checking account option and raised their standard minimum account balance to $6,000. The fee for not maintaining that balance jumped to $15 a month, which is double the previous amount. Their mid-tier account requirements and fees also doubled. This is not an isolated case. Banks all across the company are fiddling with their account requirements in order to acquire new fees.

Debit fee—Perhaps in response to the 2010 Durbin Amendment, which famously limited the fees banks could charge merchants, Bank of America had planned a monthly $5 fee last year for debit card use. The customer backlash from the announcement was so severe that BofA cancelled the charge. Since then at least four more banks have cancelled proposed debit card fees, including JPMorgan Chase, Wells Fargo, Atlanta-based SunTrust, Regions Bank. But don’t expect them to just give up. Analysts say that in the long run, banks will bilk the money they want by instituting higher monthly bank account fees, higher ATM fees, and the elimination of debit reward programs.

Bank account fees are nothing new, nor are transaction fees. But being charged money simply to spend your own money via a debit card is a relatively new invention that deserves to be second-guessed. Account holders should also be vigilant of what kind of checking account they are enrolled in and what fees they are incurring.


Jenna is a finance major and graduate student at Saint Louis University. Jenna works in small business investing and hopes to travel the world while finding the next big thing. When she isn't working, you can find Jenna with her nose in a book, or her headphones in to block out the rest of the world.