Wells Fargo to Institute Debit Card Fee
Wells Fargo Bank next month will begin charging a $1 monthly fee for debit card transactions, part of a new round of fee hikes by banks seeking to shore up their bottom lines.
Wells Fargo spokeswoman Kim Kellogg said the fee matches a transaction fee imposed last fall by archrival Bank of America. “We are meeting the competition,” she said.
Industry analysts said the fees were probably needed to cover the increased costs of electronic transactions and to boost revenue at a time when banks face financial pressure. Wells Fargo’s income plummeted 22% the first three months of 1992 as it added $215 million to its cushion against possible loan losses.
Mark Foster, policy analyst with San Francisco-based Consumer Action, said he was dismayed with the follow-the-leader approach to fees.
“You hear banks talk about what a competitive industry it is, but when it comes to (debit card) fees, there is a distinct lack of competition,” he said. “That is disturbing.”
Debit cards are used to conduct transactions at bank ATM windows or to make purchases at stores equipped with electronic scanners. The $1 monthly fee is being imposed on purchases, not on ATM transactions, and is waived if bank customers maintain minimum balances.
Meanwhile, Bank of America and First Interstate have hiked fees on ATM transactions made at other banks. Bank of America raised the fee to $1.50 per transaction from $1.25 in March. First Interstate raised its fee to $1.50 from $1 this month, citing higher costs.
The new bank fees aren’t the only charges associated with debit card purchases. Merchants that accept debit cards--including Arco gas stations and Wendy’s and Carl’s Jr. fast-food restaurants--impose fees ranging from 10 cents to 25 cents for each sale.
Foster said people who don’t make electronic purchases are likely to find the new bank fees upsetting. For example, the purchase of a 95-cent cheeseburger at Carl’s Jr. with a Bank of America debit card would trigger $1.25 in fees--25 cents from Carl’s and $1 from the bank. However, that $1 would apply to all other debit purchases in the same month. No fee will be charged if no transactions are made in the month.
But analysts said the fees aren’t likely to discourage many consumers from using debit cards. Joel P. Friedman, managing partner of Andersen Consulting in San Francisco, said consumers find the cards so convenient that they accept fees between $10 and $12 a year.
What’s more, the fees may induce some people to use the cards more often.
Once the fee is paid, Friedman said, “they can use the card to their heart’s content.”
