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As reported in the Wall St. Journal on September 30, Bank of America and many other large banks will begin charging a monthly fee to use a debit card. Why? Congress has put pressure on banks to make their fees more transparent, which is a good thing. So, the Federal Reserve made a new rule in June that banks with over $10 billion in assets cannot charge a merchant more than 24 cents per debit card transaction. Currently, the average charge is 44 cents. Since the banks can no longer collect the fees from merchants, they will begin collecting from customers.

Does this matter to you? It depends. If you keep a healthy balance with a large bank, chances are you will be exempted from the fee. If you keep all of your money with small banks or credit unions, who are not subject to the rule, then they might copycat the large banks and charge you anyway, but probably not. If you have an “extra” checking account with a small balance at a large bank, it may give you an incentive to close that account, or at least close the debit card linked to it.

In the bigger picture, though, is an irony. The rule was prompted and encouraged by Democrats, known as champions of the little guy. Now, the little guys with the small accounts at the large banks will be eating the fees that the middle class and rich guys used to bear whenever they bought from a merchant. More than likely, little guys will switch to credit unions and small banks, and the big banks will be left with the big balance accounts. So who did it really help?

As a fiduciary, I am all in favor of disclosing, in plain sight and in plain English, every cost and every fee that financial consumers, borrowers, businesses, and investors are about to incur before every transaction. But this rule goes beyond disclosure and forces a needless shuffling-around of accounts and costs. It would have been better for everyone to have merchants and banks disclose the cost of a debit card transaction to their customers, and let them decide on their own what to do.