After months of banter between bankers and retailers, both agree to dislike the new Federal Reserve cap on debit card swipe fees.
Last week, the Fed voted to cap the fees at 21 cents per transaction, up from an earlier proposed cap of 12 cents. Banks and credit unions say the cap is still too low to cover the cost of maintaining debit card networks. Retailers say the new cap is too high, particularly for small businesses with tight profit margins. The fee cap will take effect Oct. 1.
According to industry sources.
- It will cost banks and credit unions approximately $10 Billion.
- Free checking will continue to dwindle. Down 11% over the past year.
- You will be required to have a higher minimum balance to avoid fees.
- In September, Bank of America will start charging a $5 fee for lost debit cards.
- On July 29, U.S. Bank will increase its annual fee for individual retirement accounts to $30 from $10.
- Other banks are charging fees for everything from paper statements to talking to a customer-service rep.
Only 38% of bank branches complied with a simple request for a schedule of fees required by the Truth in Savings Act.
If you are charged with fees you deem unreasonable, by all means raise your concerns, you may get it waived. However, be sure that you have read all the fine print, including your monthly statements or any other correspondence.
As with any regulation assessed to banks, retailers or credit unions they are in business to make money. When government laws are passed to limit income, creativity and redistribution of new fees will be created on the part of banks, and credit unions to replace lost revenue. As regulation becomes more onerous, it will accelerate mergers and failures of institutions not strong enough to survive. Hence the big get bigger…and Too Big To Fail comes into play.