Getting hit with new bank fees? Blame Dodd-Frank
Over the last few months, many financial institutions have been adding new fees to checking accounts, a direct result of the Dodd-Frank financial bill passed last year. The latest financial institution to try to make up for the new regulatory costs is Bank of America, which yesterday announced a new $5 monthly fee to be assessed to debit card users:
Bank of America customers with basic checking accounts will be hit with a $5 monthly fee in order to use a debit card for purchases, the bank announced Thursday.
Banks and card companies have been aggressively establishing and raising fees in recent weeks as banks plan for new rules taking effect Saturday that limit the amount they can charge retailers for each debit card purchase.
JPMorgan Chase and Wells Fargo are testing $3 fees for debit cards in select areas, and Citibank recently announced it is raising its fees for checking accounts. Janney Montgomery Scott analyst Thomas McCrohan said last week that Visa and MasterCard, the top two debit card companies, may increase drastically increase fees on small purchases to offset the losses.
SunTrust, a regional bank based in Atlanta, began charging a $5 debit card fee on its basic checking accounts this summer. Regions Financial, which is based in Birmingham, Ala., notified customers this summer that it will charge a $4 monthly fee starting next month.
Some of the spin I saw yesterday from liberals pointed to a post from Joe Weisenthal at Business Insider, who said that he is “very happy” about the new bank fees because it forces banks to be transparent with what they are charging to the account holder.
Yeah, that’s not the point. Don’t get me wrong, transparency is a good thing. However, you could get transparency without adding to the mountain of mandates and regulations that banks are already forced to comply with. But the bill is most likely going to hurt smaller banks, including many still reeling from the 2008 financial crisis, as they try to comply with the costly new regulations and account holders.
The mindset in Congress was no doubt to stick it to banks, but that shows a lot shallow thinking. When forced to deal with new costs, the buck always gets passed to the consumer.