A future with higher debit card fees?

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

Dear Dr. Don,
With large banks such as Bank of America resorting to charging customers for use of debit cards, does it make sense to switch to a credit union? Or are all financial institutions headed in this direction? It’s crystal ball time.

Given the huge volume of online shopping — relying on credit cards and debit cards — that goes on these days, why would banks force us back to writing checks or using cash? It seems a backward motion to me. It also seems greedy. What do you say?
— Andrea Avoidance

Dear Andrea,
It was interesting to read about the new debit card fee cap that became effective Oct. 1 because the discussion revolves around banks trying to replace revenue lost when Congress limited the amount of money most banks can charge when customers use their debit card for retail transactions. Called a swipe fee, banks are limited to 21 cents per swipe, plus 0.05 percent of the transaction amount and a penny to cover the costs of protecting against fraud. The incidentals bring the maximum fee up to an average of about 24 cents per transaction. The average prior to the cap was 44 cents.

Retailers pay these fees directly to the card companies. It’s unlikely consumers see the benefit from the reduced merchant fees, but they are being asked to replace that lost fee income by banks that are proposing a debit card fee.

The limits apply to banks with $10 billion and more in assets. Most credit unions would not be subject to these limits, so they wouldn’t have the need to replace the lost revenue. Some regional banks may be in the same position. But consumers could be a powerful force in getting other banks to lower their fees. They can vote with their feet by changing banks when they disagree with a banking practice.

Large national banks are looking at debit card fees in the $3 to $4 per month range. I don’t think banks are trying to get consumers to revert to paper currency or checks. They are just testing your willingness to pay for convenience. However, transaction payment convenience can be found without paying a monthly debit card fee. You can start looking for low-cost solutions at your local credit union or regional bank.

Ask the adviser

To ask a question of Dr. Don, go to the “Ask the Experts” page and select one of these topics: “Financing a home,” “Saving & Investing” or “Money.” Read more Dr. Don columns for additional personal finance advice.

Bankrate’s content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate’s Terms of Use.