Wells Fargo will test fees on debit card purchases this fall
In a move telegraphed weeks ago, Wells Fargo announced it will charge a $3 monthly fee to its debit card customers in five states to test consumer tolerance for the bank's new moneymaking strategy.
The nation's second-largest debit card issuer this week said it had sent letters to notify customers in Georgia, New Mexico, Nevada, Oregon and Washington of the new fee, set to begin Oct. 14.
Customers will be charged the $3 fee if they make a purchase or payment, including recurring payment, with their personal or business debit card, check card or ATM card linked to their Wells Fargo personal or business checking account.
No purchase or payment? No fee.
Starting Nov. 14, customers may see the monthly $3 Debit Card Activity fee on their consumer or business checking account statement.
"We regularly review our pricing and take into account the needs of our customers, industry trends, the market competition and our cost of doing business," the company said in a statement. "Our goal is to set a fair price that is consistent with the value of each product or service."
The move comes just weeks after the major banks lost a hard-fought lobbying effort to delay the Oct. 1 implementation of the so-called "swipe fee" cap that lowers the limit banks can charge merchants for debit card transactions from 44 cents to 24 cents per swipe.
Wells Fargo estimates the new swipe card cap could cost the bank $325 million per quarter in lost revenue.
Bank CEO John Stumpf earlier announced that Wells Fargo was considering a number of revenue rescue measures, including raising minimum account balance requirements, implementing a surcharge on checking accounts and a debit card fee.
Chase launched a similar debit fee trial balloon late last year, charging a $3 debit card fee to its customers in northern Wisconsin. That trial is still under way, according to Chase.
Whether Wells Fargo and Chase expand these test debit card fee programs to include all customers, and whether other banks follow suit, largely will be determined by customer reaction.
An Associated Press-GfK poll last month found nearly two-thirds of debit card users said they would stop using their cards – many would switch to paying with cash or check – if banks imposed a $3 fee.
This fee test isn't the only revenue-saving move banks have implemented.
Indeed, the major banks have been busy belt-tightening and revenue-prospecting to help counter the expected revenue shortfalls of financial reform.
Chase, SunTrust and Wells Fargo all dismantled their debit card rewards programs. Chase unveiled a new checking account structure last February that imposes $12 monthly fees on some checking accounts that were previously free. And Bank of America raised its ATM fees to $3, with a promise of new fees to come.
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