Debit card wars......

[p kirkes]

The big news for me today was the probable cap on debit card purchases, $50.00 to $100.00, the imposition of new monthly debit card fees, $3.00, the loss of free checking with an imposition of checking account monthly fee of $15.00.

A new law enacted last year, lowered the debit card transaction fee from 44 cents to 12 cents per transaction. The law left the implementation to the Federal Reserve Board.

This transaction fee is a 16 Billion dollar shift in money from merchants to banks, so faced with a substantial loss in revenue the banks are looking for ways to make it up. Some of the ways are stated above.

The lobbying is intense and the stakes are high it's Merchants Vs Banks.

How will this affect us? Cost of making purchases, not the purchase, will be more expensive. This may drive people to use cash, checks, ATM, and credit cards more.

Personally, I use my debit card for everything except paying monthly bills and out of town hotels.

I reviewed my debit card purchases for March (thus far) and find I used it 18 times. Two were for more than $50.00. I could have paid those by check.

I don't want to use cash as it has a bad habit of slipping through your fingers. Using the ATM for $20 - $60 a trip is inconvenient and leaves you extra cash that you didn't intend to spend, but will. Burdening my credit card statement with small purchases is also cumbersome. So it looks like the $3.00 fee will be better. Although I don't like it, at my present rate of usage that would be about .08 cents per swipe, the price of convenience I suppose.

The loss of free checking really irks me since I only make 10 checks per month, thats a $1.50 cost for each check.

What to do......consolidate, use one bank, one checking account, one debit card.

Regards,

 

[Anachronism]

Interesting. The two bank cards I've had with debit capability, I've had the banks block that feature. I try to go out of my way to pay for as much as possible in CASH. If I don't have the cash, I don't make the purchase. I learned that after getting into some trouble with credit cards earlier in my life. Hell, I rarely have a credit card on me unless I expect to make a major purchase that day.

It does sound like this could have a significant affect on things for those of you who do use these cards regularly.

 

[waltky]

Banks resisting cutting debit card fees...

Lawmakers try to stall law on cutting debit card fees
31 Mar.`11 WASHINGTON — Amid intense lobbying by the banking industry, a bipartisan group of lawmakers is pushing to delay a law to dramatically reduce the fees banks collect from retailers every time a debit card is swiped.

The pitched battle over "swipe," or interchange, fees pits merchants such as retail giant Wal-Mart against Wall Street banking firms and credit-card companies. It marks the first big showdown over the scores of regulations the federal government must write to implement a sweeping financial regulation law Congress passed last year. "It's one of the bigger special-interest battles I have seen in quite some time," said Travis Plunkett, legislative director of the Consumer Federation of America. "It's like World War I out there. The trenches are dug, and anyone who wanders into no man's land gets shelled."

The lobbying war centers on a provision championed by Illinois Sen. Dick Durbin, the No. 2 Democrat in the Senate, that would require the Federal Reserve Bank to issue rules that place "reasonable" limits on the fees. The limits would go into effect in July. Draft Federal Reserve rules would slash more than $12 billion in bank revenue annually by capping the fee at 12 cents per transaction. Currently, banks charge an average of 44 cents per transaction, according to a recent Federal Reserve study.

Seventeen senators, led by Sen. Jon Tester, D-Mont., have sponsored a bill that could come to the Senate floor as early as this week that would delay the rule by two years and require a one-year study. Tester, who serves on the Senate banking committee, counts the political action committees and employees of Wall Street firms among his top campaign contributors, according to a tally by the non-partisan Center for Responsive Politics. A House bill, co-authored by Rep. Shelley Moore Capito, R-W.Va., and Debbie Wasserman Schultz, D-Fla., calls for a one-year delay.

Banks have decried the proposed cap as price-fixing by Congress and say consumers will feel the pinch as they take other steps to make up for the lost revenue, such as increasing ATM fees and eliminating free checking accounts. JP Morgan Chase, for instance, is ending its debit-card reward program. "If you are nicking into our profits, we will find a way to recover that," said Dan DeLawder, the chairman and CEO of Park National Bank in Newark, Ohio, who helps lead an American Bankers Association task force on the fees.

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