Coming soon: A fee for having a debit card

A banking customer uses an ATM at a Wells Fargo Bank branch on July 19, 2011 in Oakland, Calif.

Kai Ryssdal: Transunion said this week the credit card delinquency rate in this country hit a 17-year low. Mainly 'cause people are just using their credit cards less and their debit cards more.

Which brings us to today's news. Wells Fargo's going to start testing a $3 monthly fee for people who want to use their debit cards. Marketplace's Jennifer Collins explains on how using their own money is getting more and more costly for consumers.

Jennifer Collins: These days, it seems like we go on a spending spree just to use our money: ATM fees. Fees for having too small a balance. Fees for checks.

Jason Korstange: You've seen the virtual elimination of free checking.

That's Jason Korstange. He works for TCF Bank. Korstange says in October, federal regulations will limit the amount merchants pay to take debit cards.

Korstange: So, you know, that difference is going to have to be made up.

That same month, Wells Fargo will charge debit card users a monthly fee in five states. J.P. Morgan Chase, Regions Financial and SunTrust are considering similar moves. Banks introduced debit cards as an alternative to labor intensive check processing.

Robert Manning: Debit cards became the choice of banks because it was such an enormous cost savings.

Robert Manning is the author of Credit Card Nation. He says banks passed those savings on to consumers.

Manning: Charging people for debit cards when you're basically spending your own money is basically inflating the cost of all the high-technology efficiencies that have been invested.

Ali Raza is with Speer and Associates. He says if he were a Wells Fargo customer, this is what he'd do:

Ali Raza: I limit my debit card usage at the point of sale and I start paying with a credit card.

And those new limits on swipe fees don't apply to credit cards.

Raza: If I'm a large credit card issuer, why not 'incent' my customers to use a credit card instead of a debit card?

Which Raza said could end up inflating consumer debt.

I'm Jennifer Collins for Marketplace.

To learn more about the history of the debit card -- and debit card fees -- check out the Reporter's Notebook blog.

About the author

Jennifer Collins is a reporter for the Marketplace portfolio of programs. She is based in Los Angeles, where she covers media, retail, the entertainment industry and the West Coast.
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p.s. The ADA violation by banks charging debit card fees in my previous posting would be under Title II covering state and local government, since banks are state regulated entities.

If you are fortunate enough to have a Wachovia (transitioning to Wells Fargo) VISA debit card that can also be used as a credit card, you can start using it only as a credit card. The balance gets paid automatically so long as you have sufficient funds to cover it. Credit card transactions appear on statements the same as debit card transactions. The main difference is that you must sign a receipt at point of purchase and not use a pin, which means you can't "lend" your card to a trusted friend or relative to make purchases for you. That's a disadvantage to someone who is disabled and can't travel to stores to buy things based on their signature. Isn't there a violation of the Americans with Disabilities Act in this situation - that you are forcing disabled people to use debit cards and incur a monthly fee, compared to not incurring a fee if they were able to go to a store and sign their credit card receipts? Isn't this a violation in addition to the one mentioned by another commenter who said she is disabled and unemployed and therefore can't get a credit card?

Unless you have a cushion that is large enough to be exempt from fees, these banks are robbing the average consumer to the point where keeping your money in a mattress is safer than in a checking account. Wells "Too Big To Fail" Fargo wants to charge a ridiculous fee for the USE of the debit card - other banks will actually give you a small rebate point when you use your debit card as a credit card. I have a friend whose bank was recently acquired by Wells "To Big to Fail" Fargo - her fees for maintaining a checking account at all are now $20 a month for them doing ABSOLUTELY NOTHING.

Banks do not produce anything. Their value to the consumer is providing a safe place to deposit money which they can use, or charge fees for doing things like overdrafts, transfers, etc. FDIC insurance is of no value to the average customer when the bank is charging for use of a debit card, charging for use of a checking account - and then charging overdraft fees because the customer is on the edge and the bank fees put them in the negative.

United Bedbug Bank. Thats what the rest of us need. A mattress that no one else will touch is a safer place to store your liquid cash than with these government sanctioned and approved robbers. Bank robbers are now the banks themselves - stealing assets from the american people while pretending to serve them. No trust, no value, no security.

BofA (Bend Over America) and Wells have lost me forever. I closed my credit cards with them, and my bank accounts, and I do business with smaller regional banks or credit unions. For now.

Maybe this is a scoop but yesterday I received a letter from Suntrust informing me of their intention to remove free checking and charge $5 for the use of the check card. Looks like they are no longer in planning mode.

Korstange says: "So, you know, that difference is going to have to be made up." Why does that difference have to be made up? You mean the big banks can't scrape by with slightly lower profits? Seriously? Banks have gotten too comfortable with offering less while charging more. I agree with Jan Ward's comment: Consumers who don't want to pay debit card fees should take their business elsewhere, to a credit union (or even another bank) that won't charge for debit card use.

Way to go Wells Fargo-- should we all be reminded that WF was first in line with their greedy little hands out for their government bailout of 25 billion.
Alas, now they have found yet another way of screwing over their consumers that keep them in business.
Don't let them charge you one red cent for using your own money, switch to your local Credit Union.
Power to the people...the little people.

I wonder how the banks would like it if we gave up our debit cards for a month and start writing checks again? If you're already being charged for the checking account, why not use it?

Banks want to raise one fee to make up for less income from other fees. Nothing un-American about that. The central problem is that banks are too big. Do we really need a large market segment whose primary function is to move money around, while skimming off a cut?

I do have a question about debit cards having possible fee. I can't get a credit card, I'm medically disabled, unemployed, and having a debit card that acts like a credit card is the way that I pay my bills, get gas for my car, and get groceries. It's not that I haven't tried to get a job. I have a bachelors degree and two vocational diplomas. The economic outlook for me, and others like myself, isn't good. My disability check is deposited into the bank, but it doesn't go far at all. My question is this, what about people like myself? What do you suggest to an older woman who can't find a job, who lives on around $1k per month, who is medically disabled? I listen to your stories, to the people that you interview, and I applaud you for your insight and thorough reporting. Thank you and have a great day.

Hi Kai!

The New York Times ran a highly informative article on debit cards soon after they became popular; One of the items being what I didn't know from accounting: that banks stood to make more money from them than from credit cards.
It is critical that people have a good education on handling money. I was brought up in a business family and trained in accounting and economics: learning, over time, that it is best to have a periodic income larger than the matching periodic outgo. I always thought that this was common sense: you don't buy, or commit, what you can't afford; Apparently it is not. People need to be trained at an early age in the importance of financial responsibility by either their family, education system or both; apparently most, unfortunately, are not.

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