If you’ve seen the news at all this week, you’ve probably noticed that Bank of America is going to start charging its customers $5 per month to use their debit cards. They aren’t the only ones with new checking account fees. Citi bank will also start charging $15 per month on certain checking accounts. According to CNN less than half of all checking accounts are without a monthly fee. Personally, I don’t think anyone should have to pay money to use their own money. Hopefully you feel the same way, and will join me as I Unbank.
Why is this Happening?!
Are Wall Street bankers getting a new hunger for greed? Not exactly. In 2010, the Dodd-Frank Financial Reform Bill was signed into law. An amendment by Senator Durbin proposed that the debit interchange charged by banks be capped and regulated by the Federal Reserve. Major banks can now only charge a fraction of the interchange they used to charge. Banks are now just moving the costs from retailers to their own customers to make up for lost profits. Shareholders have an expectation of the firms they invest in to make profits for them.
What is Interchange?
I’m going to try an explain interchange as simple as possible. Whenever you swipe your debit or credit card there is a fee charged by the banks to the retailer. This fee is in place to cover the costs of processing the transaction, and to protect against any fraud. Until recently, this fee had been unregulated by the government.
The Credit Union Difference!
Luckily it isn’t all doom and gloom in the financial world, because we have credit unions! Most credit unions have less than 10 billion dollars in revenue, which allows them to be exempt from many parts of the new law. This allows credit unions to continue to provide lower cost solutions for members. Not to mention that credit unions are non-profit organizations. This means that credit unions don’t have shareholders demanding large profits and payouts. Credit unions work in the best interest of their members.
Most credit unions have low or no fee checking accounts. A good example of this is Connex Credit Union’s Unbank Checking. I recently opened up an Unbank Checking account. My old bank will soon start charging me a monthly checking account fee. I switched to Connex’s Unbank Checking because there is no monthly fee! On top of that, if I keep it green by using direct deposit, online banking, e-statements, and my debit card Connex will give me a 2.50% APY return on my money! I’m now getting rewarded to use my debit card. There’s no such thing as a fee to use a debit card at Connex!
Chris, VP of Unbanking