Good Question: Why Are Successful Banks Raising Fees?

MINNEAPOLIS (WCCO) — Wells Fargo is imposing a $3 monthly debit card fee for customers in five states, a move that comes after Bank of America increased its debit-card fees to $5 a month. So, why are banks raising fees even after reporting record quarterly profits?

“It seems like they are already doing pretty good. Why do they need to hit the little guy up for more money? This doesn’t seem right,” said one bank consumer.

Democratic Sen. Richard Durbin of Illinois recently sent a letter to Wells Fargo, calling the bank “disingenuous” for raising debit card fees.

John Spry, a business and economics professor at the University of St. Thomas, says the Dodd-Frank bill put a cap on how much banks can charge retailers, like Target and Wal-mart to process transactions. That means banks are getting less money from retailers.

“The banks are looking to replace that revenue with fees,” said Spry.

That’s where the consumer comes in, and the new fees apply to make up for that lost retail revenue. On the flip-side, consumers can now expect to pay a little less at the retailers.

“The consumer is going to pay a little bit less at the retailer and the consumer is going to pay a little more to the banker. So, as economists always say, there’s no free lunch,” said Spry.

That holds especially for the banks. Wells Fargo reported a more than $4 billion profit for the third quarter, but, this week, the bank’s shares fell more than 8 percent.

“The profits being a rear-view mirror and the stock prices more forward-thinking,” said Spry.

That doesn’t mean feelings towards the fees are going to change, but bank customers do have options.

“If you don’t like the deal you have, you can shop around. Look at your financial situation and it’s always best to be an informed consumer and shop around,” said Spry.

Customers can also look at other banks, smaller banks or credit unions.

If customers choose to stay with Wells Fargo, Bank of America and other banks that are doing this, they can avoid the monthly debit-card fee by using direct deposit and by keeping a minimum amount of money in their checking accounts.

More from John Lauritsen
  • Paul Solinger

    Rather then complain about the fees, people need to simply quit doing business with these banks and put all their money in banks that don’t feel the need to charge these fees or credit unions. There are options.

    • Burt

      Thats the beauty of our system. We, as consumers, dictate by use what is acceptable.

    • anti nanny

      People have become so dependant on the nanny to take care of their needs and complaints they may have never learned they can vote with their feet.

  • angus

    I have already noticed retailers cutting prices as a result of paying less to the banks. RIGHT!! Retaukers wukk be making more money and the banks will be making more money and the consumer gets the shaft

  • stubby

    This is why the protesters need to be in DC, not wall street. They can thank dems Frank and Dodd for this. Do you really think the banks are going to take less from a retailer and not pass that on to the consumer? The government needs to get out of the private sector and let the markets dictate which companies we want to do business with.


  • Chaseme

    So soon we forget that banks are businesses. Businesses are supposed to make money for offering a service.

    • JamieinMN

      Yea, they make PLENTY. They’re just being greedy and want MORE.

      • Chaseme

        Their greed is also employing 280,000 people.

      • Matt

        Banks are owned by hundreds of thousands American shareholders. Banks aren’t being greedy, it is the common man throughout the country that is trying to receive a return on their investment. I see no problem with it. This country was built on capitalism and successful companies. If you don’t like it I hear Cuba is a nice place to live

    • Otto

      4 billion dollars of quarterly profit isn’t making money? And that is just one bank. It would seem, from the common consumer’s point of view that plenty of money is being made and that the additional fees are borderline exhorbitant. I have nothing against anyone or any business to make a fair profit, but this looks akin to the outlandish quarterly profits made by the oil companies.

      • stubby

        Just who are you to tell business how much money they are allowed to make, or how much is too much???????? Don’t like them, don’t use them.

  • Missy

    Yes this is why we have the protesters. Remember they were at Wells Fargo door step a week or two ago. They are on the right track. If it isn’t the banks charging us, they are charging the retailer who turn around and charge us. I use a credit union, I have a debit card, online banking and oh yeah I am NOT supporting wall street and the BIG bankers. Don’t be jealous!

  • Walter

    The government should keep it big fat incompetent nose out of the market place.

    • Paul Solinger

      This isn’t the Government’s fault. Banks have been inventing fees for years. This fee just happens to coincide with the Dodd-Frank act, so it gives them a good excuse.

      • stubby

        Earth to Paul…..wake up!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! So you are going to try and tell us that Frank/Dodd, limiting bank fees, has nothing to do with the banks turning around and charging fees to the consumer? Yeah, ok, I bet you believe the Vikes will win on Sunday too.

  • Ladybug

    So, bank and retailers would rather cutomers go back to writing all those checks at the register?

  • Jason

    Why won’t the news outlets tell people that when it comes to fraud involving debit cards, it is the banks and not the merchants that have to take it in the shorts. The merchants had a relatively cheap “insurance premium” in these interchange charges coming from VISA and Mastercard where they no longer are required to use any sort of risk management to prevent fraud (anyone wonder why you don’t get asked for your proof of id any longer or why you generally dont have to sign for transaction under a specific amount). There is no liability to the merchant any longer – the banks bare most of the cost. The merchants simply added 2-3% to their margins…and you will never see that in your pocket.

    Blame the DEMS in WASHINGTON!

    • Missy

      Blame the GOP in Washington you meant,

      • Jason

        Do me a favor? Follow the housing crisis factors beyond the banks and follow its origiins all the way to Washington and tell me the party that is truly responsible for enabling the crisis. (Hints…CRA Act, Frank and Dodd).

        Do the same thing regarding these bank fees and you will find the overriding legislation that started it. (Hint…Frank Dodd).

        Hmmmm. I see a pattern!

  • Mike


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