Consumers 1, Banks 0.
But it's only the beginning, as big banks will lose roughly $8 billion in revenue now that the fees they can earn on debit card transactions were sliced from an average 44 cents to 21 cents per transaction (which is still significantly more than it costs for banks to process a debit card transaction, according to Federal Reserve research).
So what fees will banks think of next?
Increasing the fees we're already used to, and eliminating perks. We're seeing banks do both, says Bankrate.com's Greg McBride. According to their latest checking survey, only 45 percent of non-interest checking accounts are free, down from a peak of 76 percent two years ago. Overdraft fees have been on the rise for 13 straight years. ATM fees have been climbing for seven. Debit cards that offer rewards? Down 30 percent.
Bill Hardekopf, founder of the credit card research site lowcards.com, says he expects increases in credit card interest rates. While bank income was hit due to changes with debit card rules, "I don't think they have to make up the money from debit card customers," Hardekopf explained.
A single fee for a buffet of services. Instead of paying à la carte for debit card use, online bill pay and high-tech budgeting tools, banks will charge a low monthly fee and list everything you get for that price. "By pricing and charging for each individual service, they'd only be perpetuating this notion that they're nickeling-and-diming their customers to death," said Ron Shevlin, a retail banking analyst with the Aite Group in Boston. The trouble with a buffet, in my view, is if you only want to eat a little, you're still charged the same. And it's impossible to know exactly how much your dessert would have cost on its own.
But analysts argue that consumers are more likely to swallow a monthly fee for several services, especially as more banks offer nifty new technologies such as using your cellphone to make purchases and depositing checks by taking a picture.
Rewarding consumers for multiple accounts. Some analysts think banks will assess a monthly fee for checking, unless the account holder keeps a minimum balance in the account and has a mortgage, car loan, or credit card as well. Shevlin predicts we'll see more pay-less-if-you-have-more-accounts-type relationships.
Banks may also start reducing fees based on particular behaviors. For example, a customer who charges a certain amount of purchases per month on a bank's credit card or has a certain amount of direct deposits per month into a checking account could see lowered, or eliminated fees.
Look for ways to cut costs. Ed O'Brien, who studies banks for Mercator Advisory Group in Maynard, Mass., says rather than piling fees on consumers, banks should look at reducing costs. In an upcoming report, O'Brien explores how new technologies help reduce fraud and reduce check processing costs while simultaneously adding valuable, convenient services for customers. He cites intelligent ATM machines that can do so much more than spit out money and take deposits, providing "opportunities to reduce costs at the branch" while making life easier for customers.
Banks may wait a while before launching their next fee-recouping strategy. Meanwhile, consumers must keep their eyes peeled for new developments. It's up to us to be vigilant consumers, caught up on the latest fine print outlining account and fee changes.
Also, remember that while banking giants are powerful, consumers have the ultimate weapon in their arsenal: the ability to take their business somewhere else. In Minnesota, 83 credit unions have pledged to offer "fairly priced banking services," including no debit card fees "for as long as market conditions allow us to do so." (Gotta love that disclaimer).
Good non-credit union alternatives also exist. For example, USAA Bank, a federal savings bank that interacts with many of its customers online, recently reaffirmed its "fee-losophy" of free debit and free checking, including 10 free ATM withdrawals and $15 in ATM fee reimbursements. While big banks were taking the heat for debit card fees, a community bank in Florida began offering to pay new customers $5 a month for one year to attract new deposits.
It's not easy unwinding yourself from a banking relationship, especially if you have fully embraced direct deposit and automatic bill pay. Consumer's Union has several tips about switching banks at www.defendyourdollars.org.
Kara McGuire • 612-673-7293 or firstname.lastname@example.org. Twitter: @Kara_McGuire