Debit card fees are coming: How to avoid them

— -- Debit cards are convenient, widely accepted and safe. Unlike a credit card with a generous limit, your debit card will not lead you into temptation every time you go to the mall.

But, increasingly, consumers who want that kind of discipline will have to pay for it.

Bank of America disclosed last week that it will soon charge customers $5 a month to use their debit cards for purchases. Bank of America will charge the fees for both PIN and signature debit card transactions, spokeswoman Anne Pace says.

SunTrust has also informed customers that it will start charging a $5 monthly fee for debit card purchases. Chase and Wells Fargo are testing a $3 monthly fee in some of their markets.

Banks say a new rule that took effect Oct. 1 left them with little choice. The rule capped the fee banks can charge retailers when customers use debit cards for purchases at 21 cents, down from an average of 44 cents.

How to avoid debit card fees:

•Pay with cash. The new debit card fees will be imposed only if you use your debit card. Bank of America will charge the $5 fee if you use your debit card for purchases any time during the month. SunTrust's new $5 fee, which will apply to existing accounts starting in November, works the same way. Some retailers give customers discounts for using cash because cash doesn't trigger any transaction fees.

Be careful, though. Frequent withdrawals from an unfriendly ATM could cost you even more than using your debit card. The average surcharge for using an out-of-network ATM is $2.40, up from $2.33 in 2010, according to Bankrate.com's annual checking account survey. That's on top of your own bank's surcharge, which averaged $1.40 in 2011, according to Bankrate.

•Pay with credit. At the same time banks have been adding debit card fees, they've been sweetening rewards for credit card users. For example, the Chase Freedom Visa is offering a cash bonus of $200 to new card holders who make at least $500 in purchases in the first three months.

There's a reason for this largess: The regulation that took effect Oct. 1 didn't reduce the fees retailers pay when consumers use credit cards for purchases.

A couple of caveats: The best rewards deals are usually reserved for customers with excellent credit. And before you substitute your credit card for your debit card, make sure you have the self-control to spend only what you can afford to pay off at the end of the month. Otherwise, the interest on your unpaid balance will make a $5 monthly debit card fee look like couch change.

"If you carry a balance, even occasionally, the interest will more than offset the meager rewards you earn," says Greg McBride, senior financial analyst for Bankrate. "Reward program or no, if there is any possibility that your credit card purchase is going to morph into credit card debt, then stick with the debit card."

•Switch banks. While debit card charges are on the rise, they're by no means universal. USAA, a financial institution that serves members of the military and their families, says its debit card will remain free. It doesn't charge a checking account fee, either. After talking with customers, Citibank decided against charging a debit card fee, says Steve Troutner, who heads retail products for Citi's retail arm. "They told us in no uncertain terms that it would be a massive source of irritation for them," he says.

Small banks and credit unions have historically offered lower fees than the big banks, and that's likely to continue. The law mandating the reduction in debit card fees exempted banks and credit unions with assets of less than $10 billion. Many credit unions allow consumers to open an account for as little as $5.

Online banks are another option. Ally Bank offers free checking with no minimum balance. It doesn't charge a debit card fee and has no plans to do so, says spokeswoman Beth Coggins. ING Direct also offers free checking with no minimum and no debit card fees.

But before you switch to a new financial institution, make sure you scrutinize all of its fees, not just those for using a debit card. For example, while Citi doesn't charge a debit card fee, it charges a $10 monthly fee for checking accounts with balances below $1,500. Citi will waive the fee for customers who arrange for one direct deposit and one online bill payment a month.

If you decide to leave your bank, you'll probably need to keep your old account open for a while to cover outstanding checks or debits. Consumers Union offers a checklist at DefendYourDollars.org for consumers who want to change accounts.

To suggest columns: sblock@usatoday.com.