Due to the recent legislation,  known as the Durbin Amendment,  that limited and lowered merchants interchange debit card fees, big banks are fighting back by imposing that consumers pay a $5 per month debit fee to make up for their drastically reduced fees dictated by big government. The aim of this article is to provide ideas to avoid banking debit charges.

An interchange fee is the amount a merchant has to pay banks and credit card companies every time a credit or debit card is swiped. This fee covers the cost of processing the transaction and fraud prevention.  Soon after the $5 fee was announced by Bank of America, there was a big outcry and finger pointing among consumers and politicians, even though the politicians signed the bill into law in the first place.

More big banks are planning on following Bank of America’s footsteps, so the  following tips may help you fight back against outrageous banking fees:

  • Switch To A Prepaid Debit Card. American Express recently announced the launching of a prepaid debit card which features lower fees and simpler terms than most debit cards. If you choose this option, be sure to read their terms and conditions very carefully.
  • Try An Online Bank. Many online banks like Ally and ING Direct offer free checking accounts, no debit card fees and good reward programs.
  • Change To A Credit Union. The new legislation states that small local banks and credit unions with assets of less than 10 billion dollars are exempt from the fee limit. Although community banks and credit unions don’t have the fancy high tech online services, they are known for excellent customer service, free checking accounts and even rewards programs for using their debit cards.
  • Change Your Payment Methods. If you think switching banks will be too  inconvenient, you can ditch your debit card and pay by cash, checks or credit card. Neither option is perfect, but if you want to avoid debit fees they are the cheaper options. On the other hand, using a credit card to pay for everything is risky if you fail to pay off your balance every month.

Although there’s no guarantee that the government won’t come up with another “great idea” for local community banks and credit unions as well, for now you may benefit if you switch to one of these smaller banks by at least not paying $60 for annual debit card fees.