No, it’s not just you. A lot of customers are upset over the new debit card fees hitting many U.S. checking account holders within the next couple months.
As CNN Money reported this morning, “Recent fee hikes from some of the nation’s biggest banks have attracted the wrath of customers, some of whom are taking their business elsewhere.”
And my own site, which offers a free credit card deals comparison tool, has seen its highest average weekday traffic volume ever in the aftermath of these new fees.
Clearly, folks are voting with their feet and their wallets. About time. I think the large banks made a rather serious mistake in assuming customers will take any amount of abuse, because it’s “inconvenient” to switch your purchase habits onto a new credit card — and even more of a hassle to switch your checking account.
Except it’s not that much of a hassle. I did the maths on my own personal checking account at a bank that is rolling out a new $5 per month debit card fee. Between that fee ($60 per year) and the already exorbitant $12 per month “maintenance fee” ($144 per year) extracted on months when a payroll direct deposit doesn’t go into that account, this checking account is now costing me a minimum of $204 per year to keep open.
No thanks. I’ll close this account out and use my existing no annual fee credit cards to make purchases, instead of an expensive debit card which provides nothing in the way of cash back, air miles, or reward points.
And, occasionally, I’ll use cash for small, quick purchases at the coffee shop and gas station. Cash is still king.
I’m barely old enough to remember a time when banks paid their customers, and not the other way around. The bank wanted your deposit business so it could loan that money out at higher interest to other customers in the form of auto loans, mortgages, and credit card accounts — thus making a profit on your deposit. It was capitalism at its most beautiful and efficient.
To keep you happy, they didn’t fee the heck out of your hard-earned savings, and they actually PAID DECENT INTEREST! I remember as a kid getting the statements in the mail from NationsBank, before Bank of America absorbed them. Every month I was slightly richer than the month before. It was a great feeling.
Luckily, you can still get rewarded — go with a card company that offers solid cash back.
So, what should you look for in a new credit card to “replace” your costly debit card? First of all, you want a credit card with no annual fee. Going from a $60 per year debit card to a credit card with the same (or higher) cost makes no sense — that’d be out of the frying pan and into the fee fire.
Secondly, you want a credit card that REWARDS you for your business. I’m a big believer in giving your business to firms that actually want you, rather than to firms that take you for granted.
I personally love American Express’ Blue Cash Everyday which has no annual fee, offers 0% intro APR on new purchases for the first 12 months, and has a very lucrative cash back rewards structure: 3% cash back at supermarkets, 2% cash back at gas stations and department stores, and 1% cash back on all your other daily purchases.
See more details, compare, and apply online for this offer here.
Another great cash back card at the moment is the Discover More credit card. It has no annual fee, offers 0% introductory APR for 15 months on purchases and balance transfers, boasts 24/7 access to a U.S.-based account manager within 60 seconds via phone (no long phone menus or disorganized overseas call centre), and provides “5% Cashback Bonus® in categories that change like travel, gas, groceries, restaurants, home improvement stores and more.”
More details and online application link for this offer can be found here.
One final suggestion: Don’t look at getting a new credit card account, or switching your checking account business over to a new bank or credit union as a hassle. That’s what the banks want you to do. They want you to be lazy, and afraid of trying someone new.
Instead, use the new fees as an opportunity to finally get your financial house in order: bank with the companies you want to bank with, use only cards that reward you, pay off your balance in full each month so you don’t accrue interest charges, and use fantastic free personal finance tools like Mint.com and BillGuard to keep better tabs on your plastic spending.
The banks instituting those debit card fees are betting on your laziness. That’s a bet I’d love to see them lose over the next few months.
— provided by Outlaw; compare more deals in our deals portal.
Disclosures: We’re a credit card offers comparison site, so obviously we maintain financial relationships with numerous banks and financial institutions, including AmEx and Discover.
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