Problems Surrounding Debit Card Fees

Debit cards work like credit cards, in that you can use a debit card to make a purchase or pay a bill as opposed to using cash or writing a check. However, debit cards use money from your bank or other account to fund the transaction, so you must have the funds available to use a debit card. Like credit cards, debit cards also typically come with fees as penalty for breaking some form of the debit card usage agreement. Those fees can create problems for debit card holders.

Types of Fees

Debit cards come with several different fees. For example, if you use your debit card for a purchase but do not have enough funds in your bank account to cover the cost of the transaction, your bank might still authorize the transaction and allow you to make the purchase. However, your account will fall below zero, and the bank will likely charge you a fee for making the purchase with insufficient funds. Fee amounts vary by bank, but this particular fee typically costs around $35 in 2011. Some banks also charge a fee for using your debit card as an ATM card to withdraw cash. If you withdraw cash from an ATM that is not affiliated with your bank, your bank might charge you a few dollars for the transaction. Plus, the ATM might have a fee on top of that, so you pay both your bank and the ATM fees for the withdrawal. Other possible fees include debit card replacement or activation fees.

Financial Problems

Fees from debit cards can cause financial problems for card carriers. For example, if your account is overdrawn and your bank charges you a fee for insufficient funds, your account becomes even more overdrawn, making it harder to pay bills and bring your account positive. Also, debit card fees can add up in the short and long term. For example, if several debit card transactions hit your account at the same time, and the account is already overdrawn, you are charged a fee for each transaction, which can costs you hundreds of dollars. To avoid this, use your debit card wisely, and check your balance regularly to ensure you have sufficient funds to cover your purchases.

Other Problems

Debit card fees can cause other problems as well. For example, unexpected expenses and financial stress can be harmful to your health and lead to significant health issues like heart problems, according to Health.com. Also, if your account is overdrawn, your transactions might be denied until you bring the account positive, which leads to embarrassment and lower self-esteem. Financial issues due to debit card fees can also negatively affect your relationships with friends and family, causing arguments or disagreements over finances or money management.

Swipe Fees

Debit card fees charged by banks are not only problematic to consumers; retailers are paying the price as well. Each time a consumer uses a debit card to make a purchase, banks charge merchants a swipe fee. Many merchants prefer customers use cash instead to avoid this fee. In 2009, the average swipe fee was 44 cents per transaction, according to PBS. In December 2010, the federal government proposed a bill to give merchants some relief and cap the swipe fees at 12 cents per transaction. As of the May 2011, the debate is ongoing and no reform has been passed to eliminate or reduce swipe fees merchants pay.