In September 2011, Bank of America announced that it would charge customers a monthly fee of $5 for debit card use. It was met with widespread grumbling, but CEO Brian Moynihan said it was necessary to make up for the billions of dollars it would lose as the result of the Dodd–Frank law. "I have an inherent duty as a CEO of a publicly held company to get a return for my shareholders," he told CNBC.
While most consumers may be unhappy with the decision, the truth is they’re already paying fees on their credit and debit cards. Here are some things to watch out for to avoid paying extra fees when you use your cards, according to the credit card search resource NerdWallet.com.
Balance Transfer Fee
Every so often, people find credit card offers in their mailboxes that present the tantalizing proposition of a balance transfer with a zero percent interest rate. For many cardholders with high balances, this teaser deal can seem to be too good a deal to pass up, but they should closely examine the fine print. There’s usually a fee for the transfer itself, often amounting to a hefty 3 percent to 5 percent of the balance.
Cash Advance Fee
Cash advances allow consumers to withdraw money, and are available with most credit card accounts. These advances incur a fee that is higher than those incurred by store purchases, and much of the time they don’t qualify for the zero percent interest that cardholders with zero balances receive. These fees are on the rise, and a 4 percent or 5 percent fee on cash advances is becoming common. Cardholders wishing to avoid these hidden charges should look into credit union credit cards, where cash advance fees are 1 percent or less.
Foreign Transaction Fee
Most large banks assess a 3 percent fee for credit card or debit card transactions conducted in a foreign country. This can be a nasty surprise for people coming back from a vacation, but it can be avoided by using one of the cards that don’t charge these fees, including Capital One Venture Rewards, Chase Sapphire Preferred, and the American Express Platinum Card. A complete list, updated on Oct. 7, 2011, can be found here.
Overdraft or Over-Limit Fee
Credit cardholders who exceed their limits should expect to pay approximately $30 per incident, while overdraft fees on debit cards cost the consumer approximately $25 per incident. The Federal Reserveissued regulations in 2009 that limited a bank’s ability to assess these fees on debit cardholders, but many banks responded to the new rules by offering customers overdraft protection. This service costs consumers an average of $100 per checking account, according to a 2009 study by the Federal Reserve.