Dodd-Frank Says Debit Fees Must Go Down, But Must Checking Fees Go Up?
Despite what many banks would have you believe, they don’t have to increase checking fees to compensate for new federal debit swipe fee restrictions – in fact, there’s little correlation between the two fee sets at all.
That’s according Merchants Payments Coalition (MPC) report, created using data from moneyrates.com and Bankrate.com, which analyzed the average bank fees in both the pre and post-Durbin Amendment world.
Under the Durbin Amendment -- part of the larger Dodd-Frank Wall Street Reform and Consumer Protect Act – large and medium sized banks face restrictions on how much they can charge for debit card swipe fees. Many have since raised checking fees, claiming they need to compensate for their debit fee losses.
The MPC report suggests the numbers don’t match such logic, and also reveals interesting trends among small banks unaffected by the Durbin reforms.
Swipe vs. Checking Fee Correlation
Banks may claim they want to increase checking fees to compensate for decreased swipe fees, but data shows they’ll increase the former no matter what. Between 2005-2011, swipe fee revenues nearly doubled from $30 million to $60 million, but checking grew as well, increasing from a monthly average of $11 to $14 over the same period.
Small Banks Raise Fees Too
The Durbin Amendment swipe fee restrictions only apply to banks with over $10 billion in assets, but small banks raised consumer by 5.52 percent during the first half of 2012 – more than the larger banks actually affected by the reform.
Post-Reform Checking Fees Unchanged
Overall, fees charged by large banks decreased after the initial legislation passed in October 2011, but have recently risen, and in some cases surpassed their pre-reform levels. Before the Durbin Amendment, large bank monthly checking fees were $13.66 – today they’re $13.88. Small bank monthly fees have increased even more dramatically, from $9.21 to $9.87.
Monthly Service Fees Falling
One trend consumers will appreciate? Large and medium-sized banks are slowly doing away with monthly service fees, with 21.03 percent of big banks and 42.74 percent of medium banks doing away with said practice. Those numbers are up from 20.17 percent and 37.86 percent, respectively, when large and medium banks were surveyed at mid-year 2011.
To see more statistics, read a full analysis of the report here.