ST. LOUIS — Bank of America’s decision to charge $5 a month for debit cards enraged many consumers — but thrilled bankers at smaller institutions.

“Why pay for your debit card?” says an ad for First Community Credit Union, the biggest credit union in St. Louis.

“We’re treating it as our bags-fly-free moment,” gloated Patrick Adams, CEO at St. Louis Community Credit Union, referring to the Southwest airlines ads mocking fees charged by competitors.

Bank of America is the largest bank in the nation. But as competing bankers happily point out, anyone who wants a free debit card will be able to find one here. For now.

The Great Recession and acts of Congress have turned the economics of checking accounts upside down, and a debit card is part of a checking account. As a result, banks of all sizes have been looking for ways to boost fees for customers.

“Stealth fees are sneaking up in the middle of the night,” Adams said.

“Free checking,” the most common customer lure of the last decade, is fading fast. Two years ago, 76 percent of banks offered free checking accounts. That’s down to 45 percent now, according to an August survey by, and it’s expected to fall further. More banks are requiring customers to keep minimum balances or meet other hurdles to avoid monthly fees.

Now a few megabanks are seeing whether customers will pay for debit plastic as well. Regions Bank, the fourth-largest in St. Louis, is adding a monthly $4 debit card fee for some customers. Some are crying foul.

“It should be free for me to spend my own money,” said Liana Kopchak of Florissant, Mo.

She dares not dump her debit card because fewer merchants these days take checks. “Seriously, name me a gas station that will take a check,” she said.

A free checking account used to be a rare find. That began changing about a decade ago, and the growth of debit cards is a big part of the reason.

Banks discovered that they could lure customers in with free checking and free debit cards, and make money in other ways. Merchants paid the banks about 44 cents every time a customer used the card. So banks added “rewards” — such as airline miles — to get customers to use the card more and more. Merchants hated that, complaining that the banks charged too much.

Debit cards also made customers more likely to overdraw their accounts by accident — producing a revenue bonanza for banks. A 99-cent iTunes music purchase, paid for with a debit card, could result in a $30 overdraft fee.

About 25 percent of customers overdraw their accounts, according to a 2008 FDIC study. About 10 percent of customers had 20 or more overdrafts, paying an average of $1,610 per year in fees. They produce a big profit for banks.

Most big banks programmed their computers to cash the larger debits first when an account was nearly empty, increasing the number of smaller debits that would bounce, each with an overdraft fee.

Meanwhile, bankers were still making money the old-fashioned way — paying zero interest for checking deposits and lending the money out at 7 percent or more.

Now all that is changing. Lower interest rates on loans are squeezing bank profit margins. Car loans that went for 7.5 percent five years ago are at 4.4 percent today.

But the biggest changes are coming from Congress. The banking industry caught much of the political heat for the 2008 financial crash, which weakened their lobbying clout. “The banks were down and out, and nobody liked them in Congress,” said Charles Kim, chief financial officer at Commerce Bank.

Congress started listening to voters angered about bank charges and merchants demanding lower debit card swipe fees.

First, Congress stopped banks from raising interest rates at will on existing credit card balances. That was hardest on the giant banks that dominate the credit card business.

Then, lawmakers forbade banks from imposing overdraft charges on debit card transactions, unless the customer agreed. An FDIC study said that move chopped banks’ revenue from deposit accounts by 16 percent.

Next, Congress told the Federal Reserve to cut the swipe fees merchants pay on debit card transactions. The fee went from 44 cents to 24 cents, starting this month. It will subtract $6.5 billion from bank revenue, leaving the money with merchants.

That measure, long a holy grail for retailers, was sponsored by Sen. Richard Durbin, D-Ill. Durbin caught flak about the new debit fee, and pushed back.

Bank of America is “sticking it to its own customers” with the debit card fee, he said on the Senate floor this month. He argued that merchants would lower consumer prices in response to lower debit swipe fees.

Others scoff at that.

“Is Walmart giving you a rebate now?” asked Joe Stieven, who analyzes bank stocks at Stieven Capital Advisors in St. Louis.

The Durbin amendment will force higher consumer bank fees, he said. “If anyone thinks that banks are going to sit back and do nothing while political rules change that severely impact profits, they’re mistaken,” the analyst said.

The new rules make it “impossible” to make money on a free checking account, said Kim, of Commerce Bank.

“We’ve got to find some way to replace that revenue,” he said.

Banks also will be cutting costs, perhaps by closing branches, he said, although Commerce hasn’t yet decided how it will react.

Bank of America plans to roll out the debit card fee early next year. Customers will pay it only if they use the card for a purchase during the month. ATM use will still be free.

It’s not certain that giants such as Bank of America can make fee increases stick in high-competition areas.

On the one hand, the bank offers convenience with an extensive branch system, links to the Merrill Lynch brokerage and ATMs spanning most of the nation.

On the other hand, competing banks are not lining up to add debit card fees, at least not yet.

“Typically, the very large banks lead and the smaller banks sit back and judge the impact,” said Tom Holloway, president of Illinois-based Bank of Edwardsville. His bank offers free checking but won’t be advertising it, he said.

Some see free checking as the hook that gets a customer in the door so the bank can sell a loan, credit card or brokerage account.

Many smaller banks are under less profit pressure, having avoided real estate and mortgage woes that weakened large banks during the recession.

And the swipe fee cut will hurt the small players less. The fee cut applies only to banks with assets over $10 billion. Smaller banks can legally charge merchants more. But it’s not clear whether Visa and MasterCard, which run the networks, want to operate a two-price system.

“We think there will be some erosion in our income, but we’ll have to wait to see how it unfolds,” said Adams, of St. Louis Community Credit Union.

Although the details aren’t out, Bank of America plans to exempt its more profitable customers from the debit card fee. In fact, the bank may intend to shove some of its unprofitable customers out the door, said Mike Branton of Strategy Corps, a bank marketing consulting firm in Nashville, Tenn.

Even under the old rules, banks generally lost money on 30 to 50 percent of checking account holders. They tend to be people with low balances who rarely use debit cards, never have overdrafts, write lots of checks and don’t have loans from the bank.

“Bank of America’s strategy toward the unprofitable is that, ‘We’re firing them,’ ” said Branton.

Still, Branton thinks there’s a smarter way to raise revenue. Rather than angering customers with new fees, it’s better to tempt them into accounts they’re willing to pay for.

For instance, a bank might offer accounts with identity fraud protection, accidental death insurance or discount coupons at area merchants. Customers might happily pay for that, said Branton.

Yet, the big banks may rather bet on something more significant: customer inertia.

“I’m torn about leaving (Bank of America) for several reasons, the first being the amount of time it would take me to move all of my electronic bills, automatic withdrawals and direct deposits,” said customer Ryan Hendrickson of St. Louis. But he doesn’t like paying $5, either.