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 costly. 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 like to be able to take control of cash today debit cardinterchange rates. As Dana Perino describes them, 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 extremely difficult for these smaller banks to offer the essential services to their customers.
If the Federal Reserve were to cut off the income stream, smaller banks would probably end up having no choice but to pass on the cost to customers. In numerous of these cases, this would drive them to larger, a lot more impersonal banks that won’t have as much competition and can charge more for credit services. All of the consumers who balk at this will have to rely on cash, checks or fast short term personal loan for their transactions, which offer no insurance on the back end in the event of fraud.
Dick Durbin’s amendment advances financial reform
Consumers have the pictures painted for them by Dana Perino also. Imagine what retailers will do if debit card transactions cost them more. Customers may have the cost passed to them. Most 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.
Price controls do not work
Historically, price controls like this haven’t worked. The blog Wizbang uses the example of the prices of gas in Hawaii. An additional example is Australian legislation from 2003. Then the retailers decided to charge a lot more for plastic and has continued that way. What Perino and many other concerned consumers are wondering is how something like the Dick Durbin amendment can sneak in without much attention, and will these consumers have to depend upon fast cash short term loans with no credit check a lot more often.
Read a lot more on this topic here
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
