Beat the Banks

By now you have heard that the Durbin Amendment to the Dodd-Frank Wall Street Reform Act has passed in Congress. It was originally supposed to help retailers and small businesses save money by reducing the transaction fee that they had to pay to the banks so that they could accept debit card transactions. Theoretically, this savings could then be passed on to us, the consumers. For more information on the history of debit cards and how they actually save money for banks-check out this article from the NY times.

However, the banks are especially good at jumping through any hoops Congress puts before them. Bank of America and many other banks are increasing their fees and restrictions on savings accounts. 
Specifically, Bank of America will start charging a $5 fee each time you use your debit card beginning in 2012. The exception to this are those with a balance of $20,000+ or a mortgage with Bank of America. Citibank is also increasing monthly service fees and higher minimums to qualify for their free accounts like EZ Checking which will start being charged $15 a month if you don't carry a minimum balance of $6,000 (previously $1,500).

We too at The Thrifty Scholar are good at jumping through hoops. Here are our thoughts on what consumers should do next:

1. Keep it local- Some small banks are exempted from the law. Credit unions and neighborhood banks probably won't be charging you debit fees, but the ATMs might not be as accessible or convenient for you as your used to from the larger banks.

2. Student accounts- Banks are less likely to charge monthly fees or have minimum required balances on student accounts. If you are taking part-time courses, see if you are eligible to apply. Make sure you bring your university ID.

3. Use Checks- Time to break out that old checkbook. It's certainly not as convenient to write out a check at the register compared to swiping your card, but it's one way of staying in control of your finances and spending only what's in your checking account.

4. Credit Cards: Keep using your credit card but treat it as you would a debit card. Only purchase items you have budgeted in, and pay off the balance in full every month. If the temptation is too high, get a pre-paid credit card, but watch out because there will likely be additional fees associated with it.

Additional alternatives? Act like a werewolf