US banks to charge more fees in 2011

Banks, in an attempt to wring more revenue out of customer accounts, are conjuring up new ways to raise fees on basic products like debit cards, cash machines and checking accounts.

As regulation curtailing the financial institutions from levying certain charges on consumers has mounted over the past year, banks have had to dream up new fees to replace those now trimmed by laws.

Banks are considering additional fees on credit cards and checking accounts. But they also are looking at new ways to make money on cash machines and especially debit cards as regulators pinch the cards’ conventional revenue streams.

Banks are thinking about imposing annual fees of $25 or $30 on debit cards, according to people familiar with bank strategies. Some also are considering limiting the number of debit-card transactions that a customer can make each month, these people say. Another idea circulating in the industry: limiting the size of a purchase that a customer could make with a debit card.

New debit-card fees are “definitely a 2011 issue,” says Robert Hammer, who runs a banking-industry consulting firm in Thousand Oaks, Calif. “The question is which quarter it will be and which bank will go first.”

People familiar with banks’ thinking say several companies also are considering raising fees on automated-teller machines for noncustomers, which currently average $1.63 per transaction.

Banks also are continuing to add fees to checking accounts, a trend that began last year. Next month, for example, customers of the former Washington Mutual will see their free checking accounts replaced by fee-based accounts from J.P. Morgan Chase, which bought WaMu in 2008. Customers can avoid the fees if they meet certain criteria such as maintaining balances.

Bank of America will soon begin testing fees of $6 to $9 a month on its most basic checking account, according to a person familiar with the plan. Customers will have no options to waive that monthly fee.

Accounts with more features can have monthly fees ranging from $8.95 to $25. Those can be waived if customers maintain certain balances, use credit cards, do their banking online or have a mortgage with the bank.

Source: WSJ