Your Cash, Up In Smoke

Orlando Magic's Dwight Howard puts up a shot against Los Angeles Lakers' Pau Gasol, from Spain, bottom, and Andrew Bynum (17) in the first quarter of Game 3 of the NBA basketball finals Tuesday, June 9, 2009 in Orlando, Fla. (AP Photo/David J. Phillip)
AP Photo/David J. Phillip
If you're living in the U.S.A., by now you're bound to have run into those little machines by the cash register for processing credit and debit cards.

"Credit or debit?" the gadgets cheerfully inquire, as they tell you the amount you owe.

What they don't tell you is the size of the fee you might be paying for using your debit card.

Not every debit card charges a fee, but for months now, some banks around the country have been charging their customers a fee every time they punch in their pin numbers to use debit cards to buy groceries, pump gas or pay for any other purchases.

CBS Evening News Correspondent Cynthia Bowers reports fees run anywhere from a quarter to as much as a dollar - fees many people don't even realize they are paying.

Debit cards were sold to consumers as a no interest alternative to credit cards. As a result, many debit card holders have been taken by surprise by transaction fees quietly adding up until it's time to pay the bill.

"It seems like the banks are doing whatever they can to squeeze every dollar possible out of their customers," says Amanda Solon, a debit card holder in Chicago who was shocked to be charged a total of hundreds of dollars for a long list of transactions she had thought were free.

Consumer advocates have a name for what's happening now with the banking industry: "fee creep."

Consumer advocate Gail Siegel points out that debit card fees fit in with other moves made by banks in recent years but are insidious in that they do not announce themselves as loudly as other charges that consumers have become resigned to paying.

"When you go to an ATM, you get a receipt that shows a surcharge. That's bad enough. This is hidden and it's dangerous to your pocketbook," explains Siegel.

For the banking industry, debit cards offer profit opportunities since transactions using the cards require less paperwork and are cheaper for banks to process.

Charter One Bank and Fifth Third Bank of Cincinnati - two of the largest financial institutions charging the fees - have a combined total of 3.5 million debit card customers. If each of those customers were to make just two transactions per week, that would add up to millions of dollars in fees.

Charter One Bank defends the fees, arguing it has the right to charge customers for convenience.

Some banks have already stopped charging the fees because they were confusing and alienating their customers.

But that doesn't necessarily mean the fees are on their way out.

Industry analysts say barring a consumer revolt, these transaction fees could be coming soon to a bank, or store, near you.

Best advice: ask questions, always read the fine print, and know the real price of everything you buy.