Most Local Banks Hold The Line On Debit,

Credit Card Fees For Now

By John Voket

Consumers across the country, and here in Connecticut, may still find themselves shelling out more money even after federal regulations slashed fees that banks charge retailers every time they accept a debit card payment. According to a recent release from Connecticut’s Better Business Bureau, banks charged an average of 44 cents per debit transaction, but on October 1 the Dodd-Frank financial reform act capped that “swipe fee” at 21 cents.

The federal banking regulation changes were designed to put more money in the pockets of consumers; unfortunately, there is no sign that retailers are passing on those savings at the register.

And since banks estimated they would lose hundreds of millions of dollars a year in debit card transaction fees, many began are testing the waters to recoup that money from customers by modifying various checking account fees. But customers of several local and regional banks serving Newtown are being spared add-on fee hikes according to officials at some of those financial institutions.

While some of the nation’s largest banks already have announced a flat monthly fee for customers who use their debit cards for purchases, others have announced new checking account fees of between $3 and $5 per month for debit card purchases. To avoid those costs, analysts say the trend could generate a spike in new account business for smaller banks and credit unions to avoid increased credit or debit charges and primary checking fees.

According to Valerie Carlson at People’s United Bank, changes to fee structures, including nominal hikes to monthly service fees for accounts falling below certain minimum balance thresholds, went into effect for certain account holders around the beginning of September.

Some account holders report a Notice of Change letter in their most recent monthly statements requiring them to maintain a $750 balance in order to wave a $10 monthly service — an increase from $8. Those with a People’s United “Interest Plus Checking” account now must maintain a $1,000 monthly minimum, and those with the bank’s “Advantage Checking” account need to maintain a $7,500 minimum to avoid a $20 monthly fee.

John F. Trentacosta, president and CEO of Newtown Savings Bank, said the impact of the legislation will most certainly be a reduction in profits, and, contrary to media reports, the local community banks are not making much money these days.

“Although we have no immediate plans to implement additional fees, there is no denying that demands of doing business have increased,” Mr Trentacosta said.

While one representative at the Savings Bank of Danbury said the bank is “actively discussing” the ramifications of the new legislation, the bank’s official spokesperson, Janice Lea said, “We have not changed any fees, and we are maintaining the no charge [policy] for ours or other ATMs.”

Amy Morris, assistant vice president at Union Savings Bank, told The Bee that at this time the bank is not contemplating any changes to its fee schedule.

“While we understand some of our competitors have responded with new or increased fees, we will continue to take a very careful look at our expenses, as they may be impacted by regulatory change, and then carefully consider our clients and the services we provide before making any changes,” Ms Morris said. “We are a mutual savings bank, which means we do not have any stockholders, and as such are not driven to provide for shareholder return or dividends. Our dividends are paid to the communities we serve.”

American Bankers Association President and CEO Frank Keating called the new debit card fees a “direct result of government price-fixing that has fundamentally altered the basic economics of offering a debit card.

“Many economists predicted that this direct transfer of costs from retailers to everyday Americans would result in higher fees for basic banking services and threaten our nation’s community banks. Unfortunately, we are now seeing that result,” Mr Keating explained.