Surprise! That debit card may cost you
By Laura Bruce • Bankrate.com

Swipe your debit card at the checkout register and there's an increasing chance that more than the purchase price and tax will be subtracted from your checking account. A fee for using the debit card also may be deducted. Debit card fees have been around a long time but they used to be pretty rare; now they're much more common.

Signing helps your bottom line
The catch is that the fee is only assessed if you treat the purchase as a debit and use your PIN to authorize the transaction. Press the "credit" key, sign your name on the receipt and no fee is charged.

In a survey by the New York Public Interest Research Group, 89 percent of the banks surveyed tack on a point-of-sale fee of anywhere from 10 cents to $1.50 for PIN-based debit transactions. While the survey looked only at New York-area banks, people all around the country are finding these debit card fees on their bank statements.

Just as with credit cards, retailers usually pay a fee for the processing of a debit card transaction. NYPIRG says a flat fee of 7.5 cents to 10 cents is paid when the PIN is used and the transaction is processed "online." If the customer signs for the purchase, it's processed "offline" and the retailer's fee can be up to 2 percent of the transaction.

It's easy to see why many banks, which receive a significant chunk of that fee, want customers to press "credit" and sign for their debit card purchases. Customers who sign the receipt not only don't get charged a fee, they often qualify for some sort of perk such as free air miles. Use your PIN and all you get is your grocery bill and a fee.

Question of disclosure
At issue is whether the debit card fees are adequately disclosed. The Senate Banking, Housing, and Urban Affairs Committee has expressed concern that consumers may not be aware of the fees until it's too late. In other words, not until they see it on their monthly statement. As a result, the Federal Reserve is taking a look at debit card fee disclosure and is giving the public a chance to voice their gripes.

Banks are required to disclose the fee in the information you receive when you get a debit card. The fee is also on your monthly activity statement. But unlike at ATMs, where you're notified that a fee will be imposed with the transaction, there's no such notice on a debit keypad at the point of sale.

Nessa Feddis, senior federal counsel at the Washington, D.C.-based American Bankers Association, says the current disclosure rules are adequate.