Changes coming for debit card users

If you are like many people, you use your debit card to make purchases and earn airline miles or other rewards when you do it.

But now changes could be in store for you.

More and more banks are beginning to charge fees when you use your debit card, and some are starting to end their rewards programs altogether.

David Payne relies on his debit card for all his ATM withdrawals and shopping since he doesn't have a credit card. So when he got a letter in the mail from his bank saying he now has to pay $5 a month to use his debit card, he was furious.

"I think, you know, in the middle of this economic crisis with all this turmoil to add more fees and more bills for someone to pay, you know, during the month is unconscionable," said Payne.

A letter like Dave's could soon be showing up in your mailbox too. Banks across the country are testing out monthly debit card fees, charging about $3 to $5 a month for the convenience of using your card.

"They're experimenting to see how consumers react," said Nessa Feddis with the American Bankers Association.

Big banks say they're now losing money from "swipe fees". Stores have to pay a "swipe fee" to the bank each time you make a purchase with your debit card. Congress recently reduced the amount banks can charge merchants per debit card purchase from .44 cents to .22 cents.

"With that money gone banks have to find someplace else to, um, for income in order to support the cost for providing a checking account," said Feddis.

The American Bankers Association says it actually costs banks about $300 per customer, per year, to maintain their checking account, and it points the finger straight at Congress for this new pain.

"To be successful in any business or any household, revenue has to be higher than expenses," said Feddis.

Consumer advocates cry that's bogus banking and say banks still make some money from swipe fees.

"I don't think it's fair for banks to raise fees and blame Congress," said Ed Mierzwinski with U.S. PIRG.

Besides charging new fees, some banks are also cutting debit reward programs.

"Swipe fees paid for rewards, and without swipe fees they're not going to pay for rewards themselves," said Mierzwinski.

If you get a letter announcing the demise of your debit reward program, cash in your points ASAP. If you get hit with a debit card fee, ask the bank to waive the fee. Some do if you:

  • use direct deposit
  • carry a minimum monthly balance
  • have multiple accounts at the same bank
  • complain to the bank or take your account elsewhere

"What I plan on doing is telling them as I close my account, I think the bottom line is, I'm almost offended that they're doing this," said Payne.

Right now, big banks seems to be the ones experimenting with debit card fees, and some banks aren't charging the monthly maintenance fee if you use your debit cards only to get money from cash machines.