Are Big Banks Boosting Revenue With Hidden Fees?

Though major banks have been moving away from charging customers for using their debt cards, many are quietly imposing other new fees.

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Bank of America (NYSE:BAC) has begun charging $5 to replace lost debit cards — $20 for rush delivery — while U.S. Bancorp (NYSE:USB) is now charging 50 cents per check deposited with a mobile phone. Starting in December, customers of TD Bank (NYSE:TD) will be charged $15 for each incoming domestic payment wired into their accounts.

“Banks tried the in-your-face fee with debit cards, and consumers said enough,” said Alex Matjanec, a co-founder of MyBankTracker.com. “What most people don’t realize is that they have been adding new charges or taking fees that have always existed and increased them, or are making them harder to avoid.”

Banks are under pressure to boost their capital reserves while facing an estimated loss of $12 billion thanks to new regulations curbing lucrative overdraft charges and lowering debit card swipe fees. They are also struggling to find attractive places to lend or invest all of the deposits they hold, posing another $8 billion drag. In total, banks would need to recoup between $15 and $20 a month from each depositor just to earn what they did in the past, according to financial consulting firm Oliver Wyman.

The need to make up for losses has led banks to create new charges and higher fees for everything from cash withdrawals at ATMs to wire payments, paper statements, and in some cases, even overdraft charges, despite lawmakers’ attempts to decrease fees. Many banks are also raising minimum account balances and adding other new requirements so that it is harder for customers to qualify for fee waivers.

Though Bank of America backed down on debit usage charges after public outrage over the $5 a month fee, it more quietly raised the cost of its basic MyAccess checking account by more than $3 a month earlier this year. Monthly maintenance fees are up to $12, from $8.95. Chase (NYSE:JPM) and Citigroup (NYSE:C) increased the price of their entry-level checking products.

Banks have managed to institute new fees and charges without many of their customers knowing. For that reason, Democratic senators Richard J. Durbin of Illinois and Jack Reed of Rhode Island urged the Consumer Financial Protection Bureau to adopt a more consumer-friendly disclosure form for all fees attached to checking accounts.

But even without interference, banks need more than new fees to cover the gap in profits. Many are hoping new products will catch on, while some are steering lower-income customers to pre-paid cards, which don’t fall under the new regulations for debit card swipe fees.

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TD Bank introduced a simple checking account with no minimum balance requirement that has signed up almost 300,000 customers since March despite a $2.99 monthly fee. And nearly ever major U.S. bank has eliminated branches and staff in an effort to cut costs. Banks are lowering the rates they pay on savings accounts, and slowly increasing existing fees.