Chase is about to fuck me over and way to go pro regulation champions.
http://online.wsj.com/article/SB100...26390.html?mod=WSJ_hp_LEFTWhatsNewsCollection
http://online.wsj.com/article/SB100...26390.html?mod=WSJ_hp_LEFTWhatsNewsCollection
Banks, in an attempt to wring more revenue out of customer accounts, are conjuring up new ways to raise fees on basic products like debit cards, cash machines and checking accounts.
As regulation curtailing financial institutions from levying certain charges on consumers has mounted over the past year, banks have had to dream up new fees to replace those now trimmed by laws. Credit-card users have experienced new inactivity fees and foreign-exchange charges, while checking accounts have gotten hit with new monthly maintenance fees.
Banks are considering additional fees on credit cards and checking accounts. But they also are looking at new ways to make money on cash machines and especially debit cards as regulators pinch the cards' conventional revenue streams.
To counter that lost revenue, banks are thinking about imposing annual fees of $25 or $30 on debit cards, according to people familiar with bank strategies. Some also considering limiting the number of debit-card transactions that a customer can make each month, these people said. Another idea circulating in the industry: Limiting the size of a purchase that a customer could make with a debit card. At the same time, reward programs for debit cards are likely to get the ax, these people say.
New debit-card fees are "definitely a 2011 issue," says Robert Hammer, who runs a banking-industry consulting firm in Thousand Oaks, Calif. "The question is which quarter it will be and which bank will go first."
New proposals from the Federal Reserve call for limiting how much banks can charge merchants for debit-card transactions. The proposals, released last month, are part of the Dodd-Frank financial-overhaul bill that was enacted last year. The Fed has proposed capping debit-card merchant fees, known as interchange, at seven to 12 cents a transaction. That represents a drop of as much as 84% from the current average rate of 44 cents.
Banks, which for years doled out debit cards to promote electronic payments that cost less than checks to process, strongly oppose the proposals. They say the Fed is essentially making debit cards unprofitable. CardHub.com estimates that the Fed's proposal will reduce the banking industry's debit-card interchange revenue by 57% to $9.8 billion.
"Any proposal that caps debit interchange fees will increase the cost of debit cards for consumers and potentially curtail debit card use," warned Steve Bartlett, president and chief executive of the Financial Services Roundtable, in a Dec. 17 letter to Fed Chairman Ben Bernanke.
Debit cards are just one of several banking products that will carry additional fees this year. People familiar with their thinking say several banks are considering raising fees on automated-teller machines for noncustomers, which currently average $1.63 a transaction. Banks have long griped about such transactions, saying that providing cash to noncustomers isn't a priority for them.
Banks also are continuing to add fees to checking accounts, a trend that began last year. Next month, for example, customers of the former Washington Mutual will see their free checking accounts replaced by fee-based accounts from J.P. Morgan Chase & Co., which bought WaMu in 2008. Customers can avoid the fees if they meet certain criteria such as maintaining balances.
"We don't want to raise fees on our customers, but unfortunately, regulation is forcing us to do it, and as a result, some customers may end up unbanked," said a Chase spokeswoman. Bank industry executives have said the new regulations will squeeze low-income customers out of traditional banking, sending them to high-fee alternatives like check cashers and payday lenders.
Bank of America Corp., which already has started adding fees to its basic services such as checking accounts, is expected to announce more of them soon. The fees are expected to be structured based on the level of account activity and the number of financial products that a customer uses.
"If you bring us more business, you will get rewarded with better pricing," said spokesman Robert Stickler. The Charlotte, N.C. lender took a first step in this direction last year when it unveiled a new account that charges $8.95 a month if customers don't use the ATMs or the Web while banking.
The banks defend the higher fees by saying that customers can avoid many of them by maintaining monthly balances and keeping the account active. At Commerce Bancshares Inc. in Kansas City, Mo., customers who have a particular type of checking account can avoid fees as long as they keep their account active and avoid any paper-based transactions. Otherwise, they could wind up paying $2 for each check that they write. The bank said the account is geared toward customers who bank electronically.
Even some of those requirements, however, are getting tougher. Chase, the retail arm of J.P. Morgan, now requires customers to make at least one direct deposit of at least $500 to waive a monthly fee. Previously, customers could make multiple direct deposits that added up to $500 in order to get the fee waived. The bank also offers other ways to avoid a monthly fee, including keeping a minimum daily balance of $1,500.
"Direct deposit just isn't going to be good enough" to get fees waived on many checking accounts, says Chad Watkins, manager of market intelligence at Informa Research Services, a Calabasas, Calif., company that tracks the financial-services industry.
Business customers won't be immune either. Bank of the West, a San Francisco-based bank with more than $60 billion in assets and 700 branches in 19 states, recently replaced its business savings account with a new one that has new features including automatic sweeping of funds from checking to savingsaccounts. But the account also has higher fees. The monthly fee rose to $5 from $3. The bank, a unit of France's BNP Paribas, also raised the average monthly balance requirement to $500 from $300.
