Bank of America Corp. plans to impose a $5 monthly fee starting early next year on customers who make purchases on their debit cards.
According to reports, the fee will be charged to bank customers with various checking accounts (but not in premium accounts) anytime they make a purchase; however, the fee won't be assessed on customers who don’t use their debit cards, or for those who use it to make transactions on ATMs.
BofA is seeking to offset losses in revenue it expected to incur from new limitations on fees that store merchants pay when customers use debit cards at their businesses. Earlier this summer, the Federal Reserve Board placed a cap on such fees, or "swipe fee," of up to 24 cents per transaction, effective Saturday. That compared to the prior "swipe fee" average of 44 cents per transaction.
That cap, which was mandated by the Dodd-Frank financial regulation legislation, will apply to banks with at least $10 billion in assets.
BofA previously warned it expected the fee-caps to wipe out $2 billion in annual revenue. The industry as a whole reportedly will lose up to $8 billion per year from the caps.
"The economics of offering a debit card have changed with recent regulations, and we’ve decided to introduce a monthly fee for customers who use their debit cards for purchases," a BofA spokeswoman said in a statement Thursday.
The move by BofA follows some other banks that have introduced debit card fees. Wells Fargo & Co. will charge a monthly $3 fee for debit and ATM cards in various states beginning in October if customers use the cards to make a purchase under a pilot program.