Thousands of Nevadans are about to be hit with a new and unwelcome charge on their checking account statements — a $3 monthly fee for use of Wells Fargo debit cards.
The bank in recent weeks has quietly disclosed plans to test the new fees beginning in October in Nevada, Oregon, New Mexico, Georgia and Washington.
The plan to test consumers’ tolerance of fees for something offered for free for years was drawn up in response to new federal regulations, industry publications say.
The regulations reduce fees banks can charge merchants each time a debit or credit card is swiped. To maintain revenue and profitability levels, Wells Fargo is looking for a way to make up that lost revenue.
It could be part of a trend, with JP Morgan Chase, Regions Bank and Sun Trust Bank all charging such fees in some locations, the Los Angeles Times reported.
“Wells Fargo regularly reviews our pricing and takes into account the needs of our customers, industry trends, the market competition and our cost of doing business. Our goal is to set a fair price that is consistent with the value of each product or service,” the bank said in a statement Tuesday.
“Wells Fargo plans to test a Debit Card Activity Fee of $3 a month when a customer makes a purchase or payment (including recurring payment) with his or her personal or business debit card, check card or ATM card linked to their Wells Fargo business or personal checking account,” the statement said. “Customers who pay the fee will continue to get zero liability fraud protection, 24x7 fraud monitoring, My Spending Report and card personalization via Wells Fargo’s Card Design Studio. Customers are being notified beginning in August 2011 through monthly checking statements, ATM messages, e-mail and statement inserts.
“There are some exemptions. Customers should check with their bankers,” the statement said.
What amounts to a $36 annual fee for using debit cards may not bust most customers’ budgets, but based on volume it could bring in big dollars for Wells Fargo in Nevada.
The bank, with some 83 branches in the Las Vegas area alone, is perennially one of the top two retail banks in Southern Nevada, along with Bank of America. Wells Fargo’s local deposits total $6.92 billion, according to VEGAS INC research.
Credit unions, always eager to attract members from banks, wasted no time in recent weeks in touting their policy of imposing no debit card fees.
“Credit Unions Just Say ‘No’ To Debit Card Fees,” said a story by creditunionsonline.com.
Nevertheless, credit union executives understand why banks are looking for ways to raise new revenue.
“The new federal mandated pricing structure for the larger banks won’t even cover their cost of offering the product, much less cover fraud losses,” Greg Barnes, a marketing executive at Nevada Federal Credit Union, told creditunionsonline.com.
“It’s another example of how federal regulation designed to protect the consumer ends up doing the exact opposite,” he told creditunionsonline.com.
So why did Nevada, where residents are already stressed by record unemployment and foreclosures, receive the distinction of being one of the five states selected for the Wells Fargo test?
“The five states were chosen to provide a broad cross-section of customers,” bank spokeswoman Lori Brown said Tuesday.