Struggling to adapt to new federal regulations, Bank of America will begin charging debit card users $5 a month to pay for purchases.
Before the Durbin Amendment, consumers never paid such debit card fees but several banks have started testing them in order to recoup revenue that will be lost in the new law’s interchange cap, Finance.Yahoo.com reports.
Bank of America, the largest U.S. bank by deposits, will begin charging its new fee early next year. The bank’s customers who hold basic accounts with modest balances will have to pay the new $5 fee.
Customers who do not make a debit card purchase in a given month will not be charged the $5 for that month.
Other banks ended their free checking account services and eliminated rewards programs once the Durbin Amendment passed Congress earlier this year, according to Finance.Yahoo.com.
SunTrust began charging $5 debit card fees on its basic checking accounts this summer and Regions Financial said that it will start charging a $4 fee next month.
Chase and Wells Fargo are also testing $3 monthly debit cards fees in a few markets.
The fees are seen by financial experts as a way to push consumers towards credit as the Durbin Amendment interchange cap does not apply to credit cards.
An increasing reliance on credit cards would be beneficial for larger institutions like Bank of America that have large credit card portfolios, Bart Narter, a banking analyst with consulting firm Celent, said.
"It's become a more profitable business, at least in relation to debit cards," Narter said, Finance.Yahoo.com reports.