How to avoid debit card fees

Bank of America got a lot of negative feedback from customers recently when it decided to start charging five dollars a month to use its debit card. The fee encouraged one Arkansas financial institution to guarantee no debit card fees for three years.

David Payne, like many of us, relies on his debit card. He doesn't have a credit card, so when he got a letter in the mail from his bank saying he now has to pay five dollars a month to use his debit card, he got mad.

"With all this turmoil to add more fees and more bills for someone to pay, you know, during the month is unconscionable," says Payne.

"They're experimenting to see how consumers react," says Nessa Feddis with the American Bankers Association.

Banks are experimenting because some banks say they're now losing money from "swipe fees." Stores pay a "swipe fee" to the bank each time you use your debit card. Congress reduced the amount banks can charge merchants per debit card swipe from 44 cents to 22 cents.

"We've guaranteed that there's no debit card fees for at least the next three years," says Randy Showmar with the Arkansas Federal Credit Union.

Showmar took advantage of the new fees by guaranteeing his customers no debit card fees. Since a credit union is non-profit, Showmar says his co-op passes its earnings back to the customers.

"The previous two months, were some of our best months ever in the form of new members joining and new checking accounts being opened, so a lot of that, I think, has to do with the debit card publicity that's been out there in the marketplace," he says.

Credit unions aren't your only no-fee option. Banks are actively advertising to get you to open no-fee accounts. Bank of the Ozarks says it won't charge you for check cards.

Payne plans on taking his business elsewhere.

"I think the bottom line is, I'm almost offended that they're doing this," he says.

Check with your bank first. Some banks aren't charging the monthly maintenance fee if you use your debit card only for ATM withdrawals. If you get hit with a debit card fee, ask the bank to waive it. Some do if you use direct deposit, carry a minimum monthly balance, or have multiple accounts at the same bank.