To First Tennessee, New Debit Fees Make Cents

First Tennessee Bank is getting ready to rake in the pennies. Lots of them, it hopes.

The issuer, which is owned by First Horizon National Corp. in Memphis, Tenn., is the latest financial institution to charge its customers for using their debit cards in the wake of new federal restrictions on debit interchange fees.

But First Tennessee is taking an unusual approach: instead of collecting a monthly fee, the bank will charge its customers a few cents each time they use their debit cards.

Starting Oct. 22, the $24.8 billion-asset bank will charge 4 cents per PIN debit transaction and 14 cents per signature-debit purchase. The bank will cap the fees it charges each customer at $3 per month.

First Tennessee began sending messages to customers in August alerting them to change.

The fees will not apply to certain checking accounts, and it will charge no fees when customers withdraw cash from First Tennessee ATMs, according to an emailed statement from Dave Miller, the bank’s head of consumer banking.

But unlike many banks that have revamped their debit card programs in recent months, First Tennessee still will enable customers to earn points toward cash rewards when they use their debit cards.

Many large banks have cut back on perks and have added fees to their checking accounts and debit cards in reaction to the new federal caps on debit interchange fees (see story). Those restrictions took effect on Oct. 1 and are expected to slash some $6 billion of the banking industry’s annual debit card interchange revenues (see story).

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