BBB Alerts Consumers To Potential New Bank Fees After Fed Orders Cut In Debit Card 'Swipe Fee'

St. Louis, Mo., Oct. 12, 2011 – The Better Business Bureau (BBB) is advising consumers to be alert to potential new bank fees in the wake of a government-ordered cut in the fees banks charge merchants to process debit card transactions.

The cut in “swipe fees” took effect Saturday, Oct. 1, under a provision of a financial overhaul bill passed by Congress and implemented by the Federal Reserve.

Banks have complained that the new limit of 21 cents per transaction is below their costs and less than half of the 44 cents that banks charge on average each time a consumer swipes a debit card to pay for groceries, gasoline or other items. Merchants have long complained about the cost of swipe fees, saying they drive up their costs and cut into their profit margin.

Analysts have said that consumers would see little effect on the prices they pay for merchandise as a result of the cut, but they could see more fees assessed on their bank accounts as financial institutions look for ways to make up for the swipe fee cut.

Bank of America recently announced that it would begin charging consumers $5 a month — or $60 a year — if they use their debit cards to make purchases after the first of the year. Other banks could follow suit.

“We understand that banks need to make a profit, but we encourage them to be transparent about fees they may add to consumer and business bank accounts,” said Michelle L. Corey, BBB President and CEO. “After encouraging people to use debit cards instead of checks for the last few years, banks are now in the position of making a convenient form of payment much more expensive for consumers.”

The BBB has the following tips for consumers concerned about bank fees:

• Check your bank statements carefully to find out what you are paying in fees every month. Call your bank if you don’t understand a charge.
• Read any notices your bank sends you to understand what you are being charged for your account now or any changes in fees the bank is planning.
• If your bank charges a fee for using your debit card and you want to avoid the fee, consider writing checks or using a credit card. Just be careful that you don’t charge more than you can pay off quickly because credit card interest rates can be quite high.