Add Debit Fees to the List of Penalties for Paying with “Plastic”

We all know that credit cards, with their excessive fees, high interest rates, and unforgiving fine print, can be the key to financial ruin…as well as many a personal bankruptcy filing. But now there’s a new unfriendly financial cost on the horizon: debit card fees.

These normally safe and fiscally responsible alternatives to their costly cousin, the credit card, are now coming into focus as the latest instrument by which banks are placing higher fees on unsuspecting consumers. The reason? New rules from the Federal Reserve poised to cut the amount banks can charge merchants for debit transactions.

And according to a new article in Raleigh’s News and Observer, these new rules for banks could mean new costs eventually passed on to you.  While we don't normally notice these “swipe fees,” as they're added into what retailers charge for goods and services, what we could expect are higher transaction fees or fewer benefits from banks looking to recoup what they’ll be losing in lost retailer “swipe” revenues.

According to the News and Observer, “The fees currently charged to merchants for debit transactions are about 1.5 percent of the purchase amount - or about 44 cents on average. The proposed rule would be a hard cap of 7 cents to 12 cents on debit swipe fees charged by the big banks. That could be $13 billion in lost revenue to the nation's banks, according to CardHub.com. Experts say banks will be forced to make up lost revenue through higher fees on other services, or consumers might be charged transaction fees directly from the bank. Banks could also eliminate debit cards on certain low-balance bank accounts.” Another bank benefit that could be killed with the new fed rule is the now-common practice where banks offer to move a small amount of money from checking to savings each time the consumer swipes his or her debit card—an incentive less welcome with fewer debit fees destined for bank coffers.

In a world where few people carry cash and more and more people are trying to avoid credit cards, these new fees (and subsequent lack of debit card benefits) could leave many consumers to ponder alternatives to a form or payment that has become not only ubiquitous, but relatively financially-friendly…at least until now.

“The Fed rule would apply to debit cards from issuers with more than $10 billion in assets. Smaller banks and credit unions could charge merchants more, but advocates for smaller institutions say merchants could choose not to accept cards from smaller lenders if they charge more. The cap on interchange fees stems from an amendment to the Dodd-Frank financial regulatory reform. It is the latest move to curb fees charged by financial institutions and is intended to be pro-consumer. The Fed is scheduled to issue final rules by April 21, with implementation in June.”

If you are wondering how to reduce your debt—debit, credit or otherwise—and get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond all of the new 2011 “fees.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-833-627-0115, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.