MICHELE NORRIS, host: I'm Michele Norris.
MELISSA BLOCK, host: I'm Melissa Block and this is ALL THINGS CONSIDERED from NPR News.
NORRIS: Well, it seemed like a good idea at the time: Tell banks they can't charge but so much each time a customer uses a debit card and save consumers some cash on those so-called swipe fees. That's what Congress intended last year when it passed the Dodd-Frank Act. And that new rule is slated to start this weekend.
But banks are finding a work around. They're imposing new fees to make up for what they won't make on each individual transaction. Several banks are exploring this and Bank of America is a prime example. It plans a new $5 a month fee for customers who use BofA debit cards to go shopping.
Some customers are angry and confused.
ANGELA WELLS: I don't like it. they've already given us a - I think it's a $12 fee - if you don't maintain a certain balance.
LEE HAROLD: Well, I personally love Bank of America. I'm willing to take $5 charges like that.
RICK BEARD: Plain and simple: That sucks. I'm not going to pay. I'll quit. I'll keep my money in a mattress.
NORRIS: That was Rick Beard. And before him, Lee Harold and Angela Wells, all talking in front of a Bank of America ATM near our offices in Washington, D.C.
Daniel Indiviglio wrote about this for the Atlantic magazine. He joins me here in the studio. Welcome.
DANIEL INDIVIGLIO: Thanks for having me.
NORRIS: Remind us, before we talk about these new fees, exactly what the Dodd-Frank Bill did.
INDIVIGLIO: Right. So there was a provision in the Dodd-Frank Bill, promoted by Senator Durbin, and it basically set a cap on how much interchange, which is what they call the fee that is collected on debit cards. So because of that cap, banks are collecting a lot less revenue from these debit cards.
NORRIS: How do these new fees work that banks are using, as we described as workaround, to try to recoup the money they might lose?
INDIVIGLIO: Right. So the big news today, as you mentioned, is this Bank of America announcement that they're going to charge $5 a month to people who use a debit card. Now, I think the big surprise here isn't that banks are trying to find that money somewhere else, but that they're being so direct about it. Until now, we kind of just all thought that they were going to kind of end free checking, find ways to charge people more for their checking account. But this seems to really be a direct way to get at those debit fee costs.
NORRIS: How do these fees work?
INDIVIGLIO: So, the way it works is up to now it's been indirect. So some percentage of a transaction with a debit card, the retailer that you buy something at will pay to the banks directly. Now, since that amount is capped, they're now going to charge consumers directly to make up that difference.
NORRIS: And only if you use your debit card?
INDIVIGLIO: That's right.
NORRIS: So let's say you're in a retail establishment or maybe even at a gas station, and you have the choice of using debit or credit. If you choose credit, do you avoid the fee?
INDIVIGLIO: At this time you do. There are interchange fees for credit, as well, but they're not affected by this particular provision.
NORRIS: And are there other ways that customers can try to avoid the fee?
INDIVIGLIO: Cash is, you know, the obvious one.
(SOUNDBITE OF LAUGHTER)
INDIVIGLIO: Cash is accepted everywhere, right? So - or most everywhere
NORRIS: As long as you don't get hit with an ATM fee.
NORRIS: How are other banks handling this?
INDIVIGLIO: Some of the others are testing debit card fees, as well. I read Wells Fargo and Chase are both looking at that as a possibility, testing some models. It's going to vary bank by bank. But what tends to happen, especially with big banks, it's become kind of an oligopoly. You know, there's a couple really big ones and they tend to move in sync. When one institutes a policy, the others do, too, just because that's the way markets work.
NORRIS: Daniel, it seems that banks were really pushing these debit cards. In some cases, asking people to move away from credit cards and instead take up debit cards.
INDIVIGLIO: Yeah, and that's an interesting point. And in this case, it looks to me like they must expect a lot of people to stop using debit, right? I mean, if you have the opportunity - if you have a credit card, if you have cash, you don't necessarily need to use a debit card. And if you're going to charge people more for it, a lot of consumers are going to drop off.
So I guess they might've liked the deposits that came along with those checking accounts, that people might keep more deposits if they're using debit. And perhaps they just realized the costs of, you know, these debit cards without being able to charge this interchange just aren't worth the rewards for them.
NORRIS: Well, Daniel, thanks so much for coming in.
INDIVIGLIO: Sure, thank you.
NORRIS: Daniel Indiviglio is an associate editor for the Atlantic.
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