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Recently, I mentioned to my girlfriend that I was going to stay put with using Bank of America for my checking account, despite their recent BRILLIANT, customer satisfaction-driven (yeah right!) decision to start charging $5 per month for the use of a Bank of America debit card.
To my brilliant statement mentioned in the title of this post, she then asked if I had a screw loose. Truthfully, her comment has merit because man, oh man, have Bank of America and Netflix made some moves recently that have upset their customers beyond belief, or what?!
As such, the goal of today’s post is to explore the various factors that went in to my decision to stay with Bank of America (for now at least). And, by doing so, I hope that it will help you to make your decision as well, if you are one of their customers.
Drivers for the $5 Fee
As much as I hate to say this, I understand why Bank of America is going to start charging this fee. It all comes down to the finances, as you might imagine.
To get a grasp for their motivations, we must first dig in to the inner-workings of how debit card transactions are processed after you “swipe” the debit card at the store. For example, let’s say that you’re at a grocery store buying a $3 bottle of wine for a dinner party on Friday night (since you’re a My Personal Finance Journey reader, and that’s how we roll with $3 bottles of wine). You approach the cash register and take out your Bank of America Visa debit card to swipe. After swiping, the card machine then asks you whether you’d like to process it as “debit” or “credit.”
Choosing between these two options has huge financial ramifications for the store from which you’re purchasing the wine.
- If you choose “credit,” the store will be charged 2-3% of the purchase cost in credit card fees to be paid to Bank of America (payday for them!) and Visa (for providing the infrastructure).
- If you choose “debit,” the store will only be charged a few cents.
If you are Bank of America, let’s think about it – which one would you prefer? Would you (as Bank of America) prefer paying the infrastructure fees to Visa, or would you like the merchant to send those to you along with some extra for a profit?! Obviously, this is a no brainer!
Details of the $5 Fee
So, as we saw in the previous section, even though I may not like Bank of America’s decision to start charging fees, I do understand it.
Furthermore, it is important to understand (my girlfriend was slightly confused about this) that the $5 per month debit card fee will not be charged for simply having a debit card. Rather, you must actually use it to buy something at a store in order to be charged this fee. ATM usage remains free (thank goodness!).
Why I’m Sticking with Bank of America
Now that we’ve gotten the important background information out of the way, we can now explore my reasoning for why I’m committed currently to staying with Bank of America (despite these debit card fees), and YOU can determine for yourself if you think I’m crazy/out of line!
These considerations are listed below:
- I only use my debit card for ATM purposes.
- The only time I ever use my debit card is to deposit cash or checks or make withdrawals at the ATM. Therefore, I won’t be charged the $5 monthly fee.
- For my finances, using a debit card makes zero sense because I get 1-3% cash back when I make purchases on my Chase Freedom Visa credit card. I am very attentive to paying off my credit card once a week so that I don’t accumulate a month-to-month balance.
- I haven’t found any banks yet that can match what Bank of America offers for my needs.
- One of the only reasons that I’m still using Bank of America is that they are truly everywhere in the United States. They are in Arkansas where my parents live, they are on the East Coast where my sister and I live – they are everywhere.
- And, the fact that Bank of America is everywhere has made it very easy on me over the past few years since I have moved three times.
- Often, I have considered moving my checking account to an online bank since they offer much better interest rates and other features.
- However, there is something to be said about having a physical bank if I need a certified cashier’s check (I just checked, and online banks such as ING Direct’s does not offer certified checks) to buy a house or pay a moving company. Additionally, I question the security of mailing a check through the Postal Service in order to make a deposit…
One thing that is important to note is that if you are a person that uses a debit card frequently for debt avoidance reasons (because you are afraid of racking up large amounts of credit card debt if you use a credit card), now might be a good time to explore changing banks from Bank of America. In my opinion, there simply is no reason for ANYONE in today’s competitive banking environment to be paying a fee for a regular checking account/debit card (unless of course you receive benefits that total more than the fee).
How about you all? Do you think I’m crazy for staying with Bank of America? If you are a Bank of America customer, are you currently looking to leave due to the debit card fee change? Why or why not?
Can you provide any suggestions on a good bank that would be suitable for me if I were to change from Bank of America? Should I go with a local or national chain? Regular bank or credit union?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/moneyblognewz/5264722308/sizes/m/in/photostream/