Former White House Press Secretary and current Fox News commentator Dana Perino warns consumers that there’s trouble brewing in Congress. This trouble could make debit card purchases substantially expensive. To be more accurate, it will actually affect nearly all consumer purchases and debit card interchange fees could be the cause, claims Perino.
Debit card fees might mean cash today for banks
Courtesy of an unheralded amendment to the financial reform law as pushed by Illinois Senator Dick Durbin, the Federal Reserve would take control of extra cash debit card interchange rates. As Dana Perino says they are, an interchange rate is “money that a retailer’s bank pays your bank when you use your credit or debit card at their store.” This money is a valuable resource to smaller financial institutions; without interchange rates, it would be difficult for these smaller banks to offer basic services to their customers.
If the Federal Reserve were to cut off some of the income stream, smaller banks would have no choice but to pass on the cost to customers. In numerous cases, this would drive them to larger banks that won’t have as much competition and can charge more for credit services. All of the consumers who balk at this could have to rely on cash, checks or fast payday installment loans for their transactions, which offer no insurance on the back end in the event of fraud.
Financial reform advanced by Dick Durbin’s amendment
Consumers have the pictures painted for them by Dana Perino also. Imagine what retailers will do if debit card transactions cost them a lot more. Of course they’ll pass the cost on to customers. Some of the retailers already do this. In addition, no-fee checking would probably end up dying off, along with various rewards programs as banks look to make up for income lost after the Durbin amendment.
Controls on price don’t work
Price controls haven’t worked within the past. The blog Wizbang uses the example of past gas prices in Hawaii. Australian legislation from 2003 is an example. At that time, retailers began to charge extra for consumers paying with plastic, and the trend has continued. What Perino and all the other concerned consumers are wondering is how something like the Dick Durbin amendment can sneak in without getting very much attention, and will these consumers have to depend upon fast cash short term loans with no credit check more often.
Fox News
foxnews.com/opinion/2010/06/04/dana-perino-dick-durbin-senate-amendment-federal-reserve/
Wizbang
wizbangblog.com/content/2006/05/08/why-price-controls-dont-work.php
