Fees on Debit Cards Fade Into Past, Survey Finds
NEW YORK -- A survey from Bankrate.com, an Internet site that tracks card trends and their impacts on consumers, has found almost none of the card issuers surveyed still charge the cardholders a fee for using their debit cards, no matter whether they sign to validate transactions or use a personal identification number.
Bankrate researchers surveyed the 10 largest banks and thrifts in 10 top markets and gathered their check card policies and fees. Only seven of the 100 surveyed institutions charge a point-of-sale, or POS, fee for PIN transactions. Five of these charge per transaction and two charge a monthly fee, the site reported.
Bankrate called the rise of the debit card "very good news for consumers" and said that consumers have embraced check cards as their preferred purchasing plastic. Since 2003, check cards have been used to make more purchases than credit cards, according to the Federal Reserve.
"The competitive environment for banks demands that they position themselves to the consumer as offering low-cost checking accounts," the study quoted Tim Sloane, director of the Debit Advisory Service at Mercator Advisory Group, a payments-industry research firm. "Core to the value proposition for consumers is debit cards. The once-common practice of charging transaction fees on debit cards has disappeared."
Greg McBride, CFA, senior financial analyst at Bankrate, agreed.
"Point-of-sale fees for PIN-based debit card transactions appear to be more myth than reality," says McBride. "Nonetheless, cardholders should always verify the terms with their issuers to avoid being surprised."
The study found that only one bank, Wells Fargo, charges a $1 per month fee to some customers for signing to validate their debit card transactions. A spokesman for Wells Fargo explained that the bank charged the fee on only some accounts that did not carry a certain balance and was not charged on a per transaction basis.
"The fee is charged for unlimited PIN-based and signature-based point-of-sale transactions and is only charged if either card has been used for point-of-sale purchases during the statement cycle," explained Lisa Westermann, spokesman for the bank.
Bankrate attributed the rise of the debit card usage to an improved focus on money management, combined with convenience and more trust in the security of the cards.
"Significant awareness was raised about the high interest rates charged by credit cards and the fees for late payments," Sloan told the survey. "Consumers have been educated about the benefits of debit cards. Consumers see it was a way to budget their money more effectively."
In the 2005/2006 Consumer Payments Usage study, the most important things to consumers were convenience and security," Bankrate said. --firstname.lastname@example.org