Proposed debit fees not welcomed by all
Posted: 08/26/2011 09:19:14 PM MDT
CARLSBAD — Come October, many Wells Fargo bank customers will see another fee on their monthly checking account statement. That fee, some local Wells Fargo customers say, is pushing them to move their accounts to other local banks.
Starting in October in test markets in five states including New Mexio, Wells Fargo will charge customers $3 a month if they use their debit card to make purchases. Customers can avoid the fee if they don't use their card or by signing up for certain checking accounts, said Jennifer Riordan, Wells Fargo director of media relations for New Mexico.
"The proposed fee is per checking account, not per debit card," Riordan said. "Also, there is some confusion that every time a customer makes a purchase with the debit card, a $3 fee will be tacked on to every purchase. That's not true."
She said customers using the debit card at an ATM machine only or for identification will not incur the $3 monthly fee.
The guinea pigs will be customers who opened business and personal accounts in New Mexico Oregon, Nevada, Georgia and Washington. It won't affect customers elsewhere unless they originally opened their accounts in one of those states, a Wells Fargo spokeswoman said.
On Friday, some Wells Fargo customers using the ATM machine at the main branch at 115 W. Fox St., said they were unaware of the impending $3 fee, while others said they are in the process of switching their checking accounts to a local bank that does not
charge a fee for the use of a debit card.
"I have already opened an account at another bank. I'm just waiting for my direct deposit to switch from my Wells Fargo account and then I'll close it," said Scott London. "Why should I spend my money on something when I can get it for free?"
Rex Allen Clark said he has banked with Wachovia since 1992, and since Wells Fargo's takeover of Wachovia, it is his opinion that both banking companies had gone into a downward spiral in terms of customer services.
"I think it is unfair that they are going to be charging $3. It really sucks," Clark said.
Heath Nesbitt said: "I don't like it. I'm probably going to go to a different bank."
Waiting her turn at the ATM, Carmen Smith reacted to learning of the fee: "Oh really. That's too bad. I will have to look into that. I have accounts at a different bank in town and I will probably move my checking account over there. Big banking companies shouldn't be doing that."
Sulema Sias, who said she and her family recently moved to Carlsbad, said that she was unaware of the impending fee.
"To me, three dollars is three dollars. I'm going to talk to my husband about this and see about moving our account," she said.
Taking a puff on his cigarette, Jerry McCoy gave some thought to the question about the $3 fee.
"If it's only three dollars a month, I probably could handle that. But I feel sorry for the people that can't afford an extra three dollars a month."
The Denver Post reported that the move comes as banks are bracing for lost "swipe fees" that merchants pay when customers use debit cards in their stores. As a requirement of the Dodd-Frank financial reform law, the Federal Reserve in June capped these fees at about 21 cents per transaction, down from an average of about 44 cents per transaction. Banks lobbied fiercely to delay or jettison the provision.
Wells Fargo isn't the first to institute such a charge and won't be the last, Greg McBride, senior financial analyst at research firm Bankrate.com. told the Denver Post.
"The result of the change in the debit-card interchange rule is that consumers get stuck with the bill," he said.
JPMorgan Chase & Co. has been testing a similar $3-a-month charge in northern Wisconsin since February, a bank spokesman said. Only one of the bank's four checking-account options comes with the fee.
Some banks are also curtailing debit-card rewards programs. Wells Fargo stopped enrolling customers in debit-card reward programs in March.
In their test programs, banks will closely monitor customer attrition, McBride said. Some customers who pay close attention to fees will "vote with their feet" and close their accounts. Others will pay the fee to avoid the inconvenience of opening new accounts and transferring bill-payment information, he said.
Banks have been adding new fees and revoking free checking programs as they lose revenue from overdraft fees, credit-card charges and now debit-card swipe fees.
Wells Fargo also has made changes as part of its Wachovia merger. The bank last year eliminated ATM fee waivers that some Wachovia customers once received in some accounts.