It’s no surprise that Bank of America (BofA) started charging a $5 fee for using their debit card. After all, they must really be hurting for money after only receiving a $5 billion dollar investment last August from Berkshire Hathaway, Warren Buffet’s company! … Right!
Seriously, this event is just another data point along a long trend of obnoxious fees that rolls us further and further down the slippery slope of expenses that are eroding away our daily finances. Unfortunately, it’s not just the banks, but airlines, energy companies, cell phones, and many others.
So why this latest fee? Just like with airlines, the banking industry is proclaiming that government regulation has added to their operating costs, and they feel the need to pass this on to their customers. Now before someone declares that this is just capitalism at play or that this is what we get when the government intervenes, let me ask you: Do you really think that every fee that rolls out to Main Street America is really for the good of our country? That these fees will somehow generate into jobs? It’s highly unlikely they do anything other than increase stock margins. No, my definition of capitalism does not include taking advantage of the common people. In capitalism, the best business wins. Do you want to show banks you don’t like these fees? Show them they have lost by letting them lose your business.
Recently, when Netflix introduced a hike in their fee structure due to extreme changes in operating costs, subscribers punished the service with subscription cancellations and it resulted in a decrease in their stock value. The YTD return is negative 35%. Click here to read my own farewell satire to Netflix.
If you don’t do anything, these fees simply become the status quo. When the airlines first announced baggage fees, there was grumbling, but over time it has simply become an accepted expense. Soon, Bank of America won’t be the only one to start charging for debit cards. Beyond that, debit cards won’t be the only thing that banks get creative about and start to charge for. What’s next? Fees to deposit your money into their bank!?
What Can You Do About It?
If the fees truly bother you, then start shopping around. Just like most services, there are plenty of substitutes that would be willing to work with you. Consider:
• Local banks: In general, local banks usually do not feel the same pressure that large banks feel to produce profits. Therefore, they would be less likely to introduce such fees or possibly waive them.
• Credit unions: Lots of people swear by credit unions because they have an entirely different structure than banks. Better rates, better service, etc.
• Online banks: Popular online savings account giants Ally Bank and Ing Direct both now have checking account services. In addition, your money earns a little bit of interest.
• Rewards credit cards: Most people who use debit cards don’t like to use credit cards. However, if you fear credit cards and the prospect of high-interest fees, you should know that you can set up automated online payments so that you always pay off your balance and never pay interest – I never have! And you can score some decent cash back. Click here to read my recommendations for the best cash back rewards credit cards.
Remember, nothing will ever change as long as you sit back and allow yourself to pay these fees. Seek out the better deals and give the most important thing that these companies want to those who deserve it – your business!