Thursday, September 29, 2011

How to Avoid Debit Card Fees Charged by Your Bank

Bank ATM
Photo from Morguefile.com
As though Americans need more bad economic news, some of the large banks plan to start charging $5 a month to their customers who use their debit cards to make purchases.  The largest bank to announce that they are going to take this action is Bank of America, according to a 9/29/11 Associated Press article titled, "More bad news for bank customers: Debit card fees."

It appears that, even if you restrict your debit card just to purchasing groceries, you will still pay an extra $5 a month as a fee to your bank if you are a Bank of America customer.  In addition, according to ABC news, other banks such as Wells Fargo are also test marketing these fees.  However, the fees are so controversial, that some banks may change their minds.

If you bank does decide to start charging these fees, you could always switch to another bank or use a credit union.  If you stay with your bank, you have a few options for avoiding these fees.

How to Avoid Debit Card Fees Assessed by Your Own Bank

* As mentioned above, if your bank begins to charge unreasonable fees, you can change banks or begin to use a credit union.

* Another possibility is to stop by your bank's ATM machine and take cash with you before you head to the grocery store.  However, it can be scary to carry around a lot of cash.  In addition, you could be embarrassed if you spend more money than you estimated, and end up short of cash.  Also, if your closest ATM is not convenient, you will waste gas by doing this extra driving.

* Another option is to go back to writing checks for your groceries and other purchases.  For the past decade, banks have worked hard to ween all of us from check writing, by encouraging us to use debit cards and pay our bills online.  However, if you only make a few purchases a month, writing checks may be cheaper than the $5 debit card fee.

* It might also be preferable for some people to use a credit card for their purchases, instead of a debit card. One word of warning on this approach:  If you are doing this to save money, you should be sure to pay off the entire balance at the end of every month.  If you carry a balance, and pay interest, it will wipe out anything you might save by trying to avoid the $5 debit card fee.

* One possibility, at least with Bank of America, is to maintain a minimum average balance of $1,500 in your checking account.  They have said that accounts with that minimum balance will not be charged this fee. Of course, you will not earn interest on this money, so that will cost you money in a different way.


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