You don't have to go along with those new bank fees
7 Ways to Avoid Those Nasty Debit Card Fees
by Bill Hardekopf
Debit card consumers are angry and looking to find ways to avoid the new monthly fees being imposed on this popular payment option.
In 2009, debit cards surpassed credit cards as the most popular form of payment. Debit cards were easy to use, payments were simple to track, there were no fees or interest charges, and some debit cards even offered rewards. But now some of the country's major banks are charging monthly fees on debit card usage, sending some consumers scrambling for another option.
No one wants to pay a monthly fee for using their own money, and if your bank has added a debit card charge, you have many other options. This is a good time to research and shop around for the best alternative for your particular need.
Here are seven tips to avoid those very unpopular debit card usage fees:
1) Ask Your Bank How to Waive the Fees
Some banks may waive the debit card fee if you meet certain requirements. Call your current bank to ask what you can do to avoid the charges. It may require a higher minimum balance on your checking account, expanding your banking relationship by opening up a savings account, or possibly moving to online banking. Bank of America will waive the debit card fee for premium accounts and for Wealth Management/Merrill Lynch and U.S. Trust clients. SunTrust and Wells Fargo will waive the fee for customers who maintain high balances.
2) Pay with Cash
There are no fees or interest payments with cash, and you may be able to just use your debit card to get cash at a network ATM without incurring a monthly fee. Cash may be somewhat inconvenient, but this inconvenience can save you money. Consumers spend less with cash because cash is the most transparent method of payment. There is real pain and awareness of how much you spend when you pull dollars out of your wallet or purse and give them to someone else. The greater the pain, the greater the resistance to spending. There is no pain or emotional connection with a plastic card or smartphone payment, and they provide no speed bumps or second thoughts for spending.
3) Pay with Credit Cards
This is a good option, but only if you pay off your balance every month on time. If you have a reward card, you will even earn a little extra by using your credit card. Banks actually hope you choose this option since they make more money on the swipe fees on a credit card transaction. In addition, if you don't pay your balance in full on time, then banks will make money on the high interest penalty you will pay on your remaining balance.
4) Pay with Checks
Remember checks? There is still no charge to write a check and the check register keeps track of your account balance and spending.
5) Prepaid Credit Cards
Most prepaid cards have so many fees that a $5 monthly debit card fee sounds like a bargain. But the American Express Prepaid card is a good option. It has no activation, transaction or monthly maintenance fees like a number of prepaid cards. Consumers are able to make one free ATM withdrawal each month and then pay $2 for each subsequent ATM withdrawal. There is no charge for loading and reloading the card through your checking or savings account. The American Express prepaid card also offers some purchase and fraud protections.
6) Switch to an ATM-Only Debit Card
If you only use your debit card for getting money out of ATM machines, you may avoid those monthly debit card fees if you switch to an ATM-only debit card. This means you won't be able to use your debit card for everyday purchases. Check with your bank to see if this is an option to avoiding the monthly fee.
7) Change Banks
You are not married to your bank. Since only a few banks are currently charging a fee for debit cards, it pays to shop around. Now may be a good time to consider a smaller bank, an online bank or credit union. But be sure to investigate the restrictions and fees of each alternative bank or credit union that you are considering; they, too, likely have some fees that you need to compare to the charges your current bank is assessing.
Updated October 2013
Bill Hardekopf is CEO of LowCards.com, a site that simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories, such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card.
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