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By: Julio Kirby
For : apaydayloan.org
Date Added : November 7, 2011 Views : 10
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Even President Obama recently aired his complaints to ABC News, saying it was unfair to customers.

That's right - we're talking about bank fees.

So what's up with these bank fees and why are banks charging them to customers? It's simple economics, really.

Banks profit by loaning consumers and businesses money. But with the present low interest rates, banks must charge lower rates on loans and therefore, they make less money. Additionally, new federal regulations have forced banks to change their fee structure on overdraft charges and late payments on credit cards.

They have to make up that shortfall somewhere, so they turn to charging customers various new fees. And because interest rates are expected to stay low for some time, you can expect these fees to hang around for the foreseeable future.

According to a recent Associated Press article, here are some of the fees the big banks will soon unveil:

• Bank of America plans to introduce a $5/month fee for making debit card purchases.

• Beginning in December, Citi will charge $20/month to some customers who carry a balance of less than $15,000 on their combined accounts.

• Last week, Wells Fargo began charging $3/month for debit cards in five states.

• Earlier this year, JPMorgan Chase began charging a $3/month debit card fee in Wisconsin and Georgia.

• In June, SunTrust Banks of Georgia introduced a $5/month debit card fee for customers with basic checking accounts.

• Earlier this month, Regions Financial Corp. of Alabama began charging customers a $4/month fee for debit cards.

But all of this bad news could be a huge break for community banks and regional credit unions, who are largely unaffected by many of the new regulations. Big banking customers are angry - and getting angrier - and the environment is perfect for smaller banks to compete!

As fees increase, customers begin to consider their options. Now is the time for community banks and credit unions to get aggressive and market themselves as a viable alternative.

If your bank hasn't done so already, launch an advertising campaign promoting your "fee free" offerings. Run newspaper ads, e-campaigns and post on social media sites what your bank or credit union has to offer that the big banks do not - mainly, free checking and debit cards!

Well, it seems to be starting already. As you may already know, the Durbin Amendment to the Dodd-Frank Act, went into effect today, October 1st. The impact this has on banks that issue debit cards is a huge loss in revenues (an estimated $8 billion). You see, up till now, whenever you swiped your debit card thru a merchant's terminal, and it was processed as a credit card rather than a pinned debit transaction, the banks earned an Interchange Fee. This Interchange Fee averaged over 1% + $.10-$.15 on the value of the goods or services purchased. With the implementation of the Dodd-Frank Financial Overhaul Act, swiped debit transaction fees are now limited to a flat $.21 plus a fee of.05% (5 basis points) that the banks will be collecting.

For merchants that accept plastic, this will result in a decrease in costs to them when processing swiped debit card transactions. Fees charged to them, by their merchant services provider, will easily be cut in half.

Gordon is a student and a writer for various financial blogs. He hopes to one day run his own financial services blog

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