5 Ways to Avoid Bank of America’s $5 Debit Card Fee

5 Ways to Avoid Bank of America's $5 Debit Card FeeAs you’ve probably heard by now, Bank of America announced that it will be charging its customers $5 a month to use a debit card. The response was swift and unequivocal–Yuck!

In some ways I don’t blame BofA for the move. When Senator Durbin introduced the “Durbin Amendment” into the Dodd-Frank financial reform bill that effectively capped fees large banks could charge retailers that accept their debit cards, everybody in the free world knew exactly what would happen. The big retailers got a windfall, and consumers got the shaft through higher fees. The only irony here is that Senator Durbin is a democrat purportedly looking after the little guy. You can probably guess what I think of the Durbin Amendment.

Regardless of whether capping debit card transaction fees is a good or bad move, it’s here to stay. And the question is how we can avoid paying the banking fees that have resulted. So we put together five ways to avoid debit card fees like the one Bank of America will levy beginning next year.

1. Find a large bank that doesn’t charge a debit card fee

Not all large banking institutions have followed Bank of America’s move to charge for debit card use. In the end, they may all follow suit. But for example, I bank at Citi and the Citi checking account still offers a free debit card. USAA is another large bank that hasn’t tacked on a debit card fee, yet.

2. Switch to a community bank or credit union


The Durbin Amendment only affects large financial institutions. Banks with less than $10 billion in assets are not subject to the cap on debit card transaction fees. As a result, community banks and credit unions likely will continue to offer free debit cards. The only drawback with a small bank is that their ATM networks tend to be a lot smaller. As a result, you could end up paying ATM fees.

3. Use a credit card instead of a debit card

There are no limits on the interchange fees credit cards can charge retailers that accept their cards. As a result, there are still many no annual fee cards available. And many of these cards offer rewards ranging from cash back to free travel.

4. Go back to writing checks

I don’t expect most people to take this route, but you can always return to the days of writing checks. I actually get annoyed when I’m in line at the grocery store and the person in front of me is writing a check. They always seem to spend a good 5 minutes carefully writing out the check and recording the transaction in their check register. But if you can avoid bank fees by using checks, it’s an option to consider.

5. Switch to a prepaid credit card

Like credit cards, prepaid credit cards also escaped the clutches of the Durbin Amendment. As a result, you can still find free prepaid credit cards, but you need to understand the terms of the card. The best prepaid credit cards charge no transactions fees, no sign-up fees, and no monthly fees if you use direct deposit. Those are the cards you want if you’re looking to replace a bank debit card to avoid the fees.

Photo Credit: FLC

Topics: Banking

8 Responses to “5 Ways to Avoid Bank of America’s $5 Debit Card Fee”

  1. I would probably wait until moving over to Citi or another large bank, because chances are they will institute the fee very soon anyways. Seems risking a whole lot of trouble to get everything moved over, only to find yourself looking at the same fees and having to do it all over again. Unless a company starts specifically advertising that they won’t put the fees in place at which point it might be worth the risk.

  2. Many small banks and credit unions are associated with larger ATM networks. My local credit union is part of Allpoint which has been everywhere I’ve traveled. And they have an android app that makes it easy to find one. They’re everywhere

  3. Joe E in the IE

    It has always cost banks more to process paper checks than any kind of card transaction so it’s only a matter of time until the banks say they need to recover lost revenues by charging per-check fees, raising monthly fees even if you don’t use your ATM card as a debit card, and astronomical minimum balances to avoid fees.

  4. Glenn Mako

    I love Bank of America and have only good experience with them. The 6th way – aka MyWay allows you to stay with BofA and enjoy debit card use for free and best of all earn 1% cash back on top of your monthly spending!
    How? – If I told you I’d have to kill you, but I have given you a hint already.

  5. Yup, to all that. Except “switch to a credit union” would be at the top of my list. Another answer is buy everything in cash.

    I used to write checks for everything, back in the day when I first decided to get completely out of debt and never touch another card that wasn’t a queen of hearts. However, it IS a nuisance. The way to avoid annoying people in line, though, is to have the check all made out except for the amount lines. Then it takes no longer to finish the check than it does to dork around with the card machine.

  6. There is no such thing as a free lunch. Having said that……..

    I used to work servicing equipement in check processing at almost all of the banks. The banks and the federal reseve have saved and are saving a ton of money by the use of debit cards. I also worked on currency verification equipment and they save money because they do not have to process as much cash.

    The banks were Grossly Overcharging their small business customers for the use of debit cards that is the reason for the Durbin Amendment. The banks also make more or as much on the float than they used to because of the use of debit cards and electronic transactions.

    This new fee is an unscrupulous counterproductive retaliatory action by the banks because the of Durbin Amendment.

    The blame lies with the executive staff of the banks and not Senator Durbin.

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