Business, Finance & Economics

Bank of America to start charging debit card users $5 a month

Bank of America plans to start charging debit card users $5 a month, Reuters reports.

The fee is scheduled to go into effect in early 2012, and according to Reuters, Bank of America is just the latest bank to make the move. Banks are looking for ways to raise revenues to make up for regulations going into effect on October 1. The Durbin amendment, part of the financial reform law, will cap the fees banks can charge merchants for processing debit cards at 21 cents per transaction. The change could potentially disrupt billions in revenue for the banks.

"The economics of offering a debit card have changed," Bank of America spokeswoman Anne Pace said.

Pace told the Associated Press the fee will only be charged if customers use their debit cards for purchases in a given month, and will not be charged if customers use their debit cards only for ATM purposes.

According to the AP, there will be no cap on the fees banks can collect from merchants on credit card purchases, which may mean that banks begin to encourage more credit card use from their customers. Such a change would help Bank of America, which is a major issuer of credit cards.

Earlier this month, Bank of America announced that it could cut up to 40,000 jobs as part of a company overhaul known as "Project New BAC." Bank of America CEO Brian Moynihan has pledged to cut quarterly expenses by up to $1.5 billion, and has already made a number of moves aimed at cutting costs at the nation's largest bank.