Wall Street and Washington are in the midst of a chess match that is leaving many CSU East Bay students the unwitting pawns and fodder for new increases in certain banking fees.
If you haven’t heard it already, Bank of America will begin charging $5 for use of their debit cards starting next year, both Chase and Wells Fargo are testing similar debit card charges in limited markets at $3, and Citibank will begin to charge $20 on certain checking accounts.
According to the Huffington Post, while the Bank of America fee won’t be charged on account holders with a balance over $5,000, a mortgage with the bank, or Bank of America employees, as well as on any ATM withdrawals, the fee will be implemented on other people and instances where debit cards are used to make purchases.
It is a one-time fee charged per month after the card is swiped at any retailer.
This is going to have the biggest impact on college students who cannot afford to hold a balance of $5,000, use debit cards to avoid piling up credit card debt, already are in a tight spot with tuition hikes, and need the money the most as it tends to represent a larger portion of their income in comparison to the general labor force.
If you happen to number among the unlucky ones, my suggestion is that you take the advice of Sen. Dick Durban, D-Ill., who on the senate floor said, “Vote with your feet, get the heck out of that bank.”
Maybe unwittingly, Durbin invoked a concept often associated with the economist Charles Tiebout who used the term “voting with their feet” to refer to people’s migration patterns towards an economy that most satisfied their needs.
In this case, dissatisfied customers would be showing their disgruntlement with Bank of America by moving their business to different companies in a very simplistic free market fashion.
Still, why on earth would Bank of America think it’s a good idea to start publicly charging fees on debit card transactions?
Well, it actually is in reaction to a section of the Dodd-Frank Wall Street Reform and Consumer Protection Act that has been dubbed the Durbin Amendment after the aforementioned senator. The amendment limits the amount of money banks can charge retailers for debit card swipes by about 50 percent.
Rather than just giving up these profits that were deemed excessive largely in conjunction with public anger at financial institutions over the recession, Bank of America decided to shift the cost of the amendment onto debit card users with their $5 fee.
Essentially, Washington’s actions and the bank’s response have transferred costs on retailers to costs on consumers.
In a certain sense, this is one of those situations where the senator’s seemingly good intentions have kind of just rubbed our faces in the muck and it will only get more worrisome if other banks like Chase and Wells Fargo decide debit card fees are a good idea.
It makes perfect sense to be annoyed and a bit angry at the hassle all this has caused consumers, but grumbling about it isn’t going to do you any good. Now is the time to take a real good look at how much you value Bank of America’s 18,000 ATMs nationwide or their 6,000 banking centers across the country and ask yourself, “Is it worth it?”
If the answer is no and you can’t handle that $5 fee, then go find yourself someone else to bank with and make sure they aren’t going to do the same thing. This is one of those moments where you might have just had an epiphany that your money is not earning any interest and you are being charged just to use it.
So, strap on your boots and start walking because if you’re going to “vote with your feet” you’ll probably need some comfy footwear.
Also, don’t get too mad at Bank of America. It is their prerogative as a profit-making institution to charge what they like as long as it doesn’t get too out of hand, which is what we will have the Consumer Financial Protection Bureau for, right?