After hearing about Hannaford’s giant customer data breach yesterday, Brian decided to cancel the debit card he’d used there. That’s when he found out that Key Bank really wants you to have a debit card. In fact, they’ll charge you a small monthly fee to not have one linked to your “free checking” account. We figure that this means Key Bank makes about $12 a year more off of customers who have linked debit cards—and that if you want greater security on your account, it’s going to cost you.
Because of the recent data breech at Hannafords, I had to cancel my debit card, which I had used there recently. I had no problem canceling the debit card, but since I recently started charging my regular expenses on a rewards card and paying that off every month, I don’t have any real need for a debit card anymore. I spoke with the teller, Brandy, asking her to cancel my debit card and replace it with an ATM card. Since I was canceling the card because of potential fraud, there’s no charge there, but I then found out there is a monthly fee of $1 for not having a debit card with my checking account, which they refer to as Key Express Free Checking.
This struck me as odd that they charge extra for the privilege of not having something.
(Dollar background: Sami Keinänen)
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Assuming it was feasible to do so, I would be more apt to closing the account than shredding the card and effectively paying for something I didn’t use. Before doing so, I would fire off an e-mail to customer service, and likely a few other higher ups at the bank as well, mentioning my concerns about the debit card, inquiring as to the exact reasoning for the fee, and, finally, stating my intention to close the account if it was not permanently removed. This would serve to satisfy my own curiosity as to their official response, remind bank executives and officials of the absurdity of the charge, and, hopefully, get someone to wave it so that closing the account wouldn’t actually be necessary.
I understand the bank’s need to make money, but, forcing customers to pay for things they flat out do not want is a really stupid way to go about it. There is far too much competition is this sector to give into something like that. I’m sure a local credit union would be more than happy to meet your needs.
Get a new debit card, cut it in half, and do not activate it. If you somehow get unauthorized charges, your cut up card that was never activated along with your history of non-use should provide plenty of proof that the charges were fraudulent.
From the comments, I get the feeling people believe that the banks want to service all customers equally and should do whatever to retain a customer. I can assure you I work in the industry and nothing could be further from the truth. Every customer has a profitability rating based on the products you buy and how much it costs to service those products vs how much money they bring in. Some banks have really refined models while others are just ballpark figures, but they do exist. These banks are either currently using this data or working on it now, in order to service the customers that bring in the most profit and retain them at whatever cost is worth it, while letting the “little guys” which generally cost money to the bank leave – they’re just gonna end up costing some other bank money.
I’m just saying, expect more and more over the upcoming years to get nothing but deaf ears and blind stares when you go demanding from the bank “or else” – unless you have big money or pay those exorbitant fees all the time you may get the “or else”.
Specifically, in this case, you signed up for Free Checking. That means “please give me as little service as possible, since I am not paying for it.” Key assumes no debits mean you will be writing a whole lot more checks. To Key, checks are expensive, if only for the record keeping and data storage (look into Check 21 legislation). So they are charging $1 a month to offset the cost in performing the check transactions.
If you can talk to a CSR, and explain that you are not going to be writing checks due to the cancellation of the debit card, you may be able to get it waived – but probably unlikely if you aren’t making much money for the bank. The banks don’t have to answer to Main Street, they have to answer to Wall Street, so don’t be surprised if they really don’t care about you like you wish they did.
@TheFlamingoKing: I see where you are coming from, but it still doesn’t make a whole lot of sense.
If you do not have the intention of using your debit card but are balking at the idea of paying the bank $1/monthly for the privilege of not having one, the decision will simply be to lock up the debit card somewhere, or shred it, and hope that you do not become the victim of some sort of credit card number fraud.
In this case, the functional difference between paying $1/monthly and not using the card is null and the bank actually loses more money because they have to deal with the liability of the debit account (assuming the bank has some sort of guarantee against fraud) and maintainence of the card in their systems and with VISA/MC.
I know I’m commenting late on this. But a nonprofit I volunteer for has a Key Bank account. For more than 14 months there never was online access. During that time there were no fees associated with the account. When I took over as treasurer I talked the other members into setting things up for online access. It was at that point that I started to see the $1 a month ATM Access fee show up. I just figured it was an online access fee since it only showed up once online banking was allowed. In the end I don’t think it’s too much considering what other banks charge in service fees. And $12 a year is small compared to the convenience of online banking.
@TheFlamingoKing: Sure, trying to get rid of unprofitable customers is just good business sense, but come on…you got the free checking, you have to do all of your transactions at ATMs, the bank is profiting on whatever meager amount you’ve got in your account, do they really need to charge you to have a non-debit ATM card? Is $12/year really going to make or break the enterprise? If the cost of cheapniks writing a million checks is the problem, why not just charge them for writing too many checks? Does Visa really give that much of a kickback for trying to force these on customers?
More likely it has less to do with getting rid of needy clients and more to do with the old “If I could get 1 million people to give me a dollar…” game.
@BalknChain: I suspect this policy has a hidden reason, in addition to fighting fraud. Banks are just dying to get people to use electronic deposit for paychecks. It is much, much, cheaper for them. At my current bank (BankOne, before Chase screwed things up), they throw in several perks if you have at least one electronic deposit a month.
@Sys Admn: Thanks. Here is another kicker; my job will not direct deposit into an account with only my husband’s name on it. Same boat, different paddle. We will go into the bank and try to have a sit down with management. If their main concern is preventing fraud/theft maybe my concerns over my ex’s potential for such will help them to understand.
**that last sentence of mine is a mess..
FirstMerit gives you a free debit card but charges one dollar a month for the honor of using their ATM card. We pay it because we don’t want to carry a debit card but we do need access to cash when the bank is closed. What a scam.