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Sunday, October 9, 2011

Who you should thank for Bank of America's new $5 monthly debit card fee

I'm assuming you've heard about Bank of America's controversial decision to add a $5 monthly fee to each debit card account. Here's why they did it (hint -- thank the Dodd-Frank "financial reform" bill):

The new $5 monthly fee Bank of America is charging debit card holders wasn't just picked because the spreadsheet guys really like Subway $5 footlongs. There's actually a calculation behind it. Here's the math.

ConsumerAffairs.com explains how under the old rules, debit card fees usually amounted to an average of 44 cents per transaction. The new rules cap the fees at 24 cents per transaction. That's 20 cents per swipe they're not making.

Now, the average consumer has 25 debit card transactions per month. Multiply the 20 cents 25 times and you get $5 as the amount, on average, Bank of America stands to lose per debit card holder per month.

So there you have the business reason for the $5.

Gee, I'm stunned.

You mean central planning didn't work (again)?

Pity the Obama Democrats can't and won't ever learn this simple economic truth.


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