Bank of America announced Thursday that it will begin charging a $5 monthly fee for debit cards, a move that may directly affect UC Berkeley students who often have to make the decision between cash or card.
This “debit usage fee” will apply to anyone who uses their debit card to make a purchase but will not be applied to those who use their cards solely for ATM withdrawals, online bill payments or mobile phone transfers, according to Anne Pace, spokesperson for Bank of America. The new fee will go into effect in early 2012.
The move to begin charging a monthly fee for debit cards is likely to directly impact the bank accounts of UC Berkeley students, as three Bank of America branches are located just off the campus.
When asked about the new Bank of America fee, many students expressed discontent.
“I don’t like it and I don’t think that a lot of people do,” said UC Berkeley sophomore Ely Niroomand.
While Niroomand said she will likely continue banking with Bank of America, other students said the $5 fee may convince them to join a new bank.
“That’s sad — that’s really sad,” said UC Berkeley sophomore Tiara Shands, adding that if fees become excessive, she “will probably switch banks.”
UC Berkeley currently has Bank of America ATMs at various locations on campus, but it is not clear if these are indicative of a larger deal between the campus and the bank that would provide fee protection for students, according to campus spokesperson Sarah Yang.
Other banks — including Wells Fargo — are expected to follow suit, and some have already implemented their own debit card charges.
“Similar to other financial institutions, Wells Fargo plans to test a … (f)ee of $3 a month when a customer makes a purchase … with his or her personal or business debit card,” said Ruben Pulido, spokesperson for Wells Fargo, in an email.
The Wells Fargo debit card fee, which will enter a limited pilot phase starting Oct. 14, will affect customers in Georgia, New Mexico, Nevada, Oregon and Washington, Pulido said.
“We have not specified how long the pilot test will run,” Pulido said.
Wells Fargo may extend the fee to other states but any expansion “will be dependent of what we learn from this,” Pulido said.
Banks claim the creation of new debit cards fees is largely in response to new financial regulation that reduces the maximum fee banks can charge for debit card transactions from 44 cents to 21 cents.
“(It is a) result of recent regulation, and the economics of offering a debit card have changed as a result,” Pace said.
The move is seen by many as a way for banks to recuperate the funds lost because of the new transaction cap, according to the Los Angeles Times.