Dana Perino, previous White House Press Secretary and current Fox News commentator, warns consumers that there’s trouble brewing in Congress. This trouble could make debit card purchases substantially a lot more expensive. It will really affect nearly all consumer purchases and debit card interchange fees can be the cause, claims Perino.
Debit card interchange fees mean cash until payday 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 payday advances debit card interchange rates. As Dana Perino says they are, an interchange rate is “money that a retailer’s bank pays your bank whenever you use your credit or debit card at their store.” This money is a valuable resource to numerous of the 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 a lot more for credit services. Consumers who balk at this may have to rely on only cash, checks or cash today unsecured personal loans for all of their transactions, which offer no insurance on the back end in the event of fraud.
Dick Durbin’s amendment advances financial reform
Dana Perino paints the picture for consumers on the retail end as well. Imagine what retailers will do if debit card transactions cost them a lot more. The cost will be passed to consumers. Some retailers do this already, but with Dick Durbin’s financial reform law amendment, it would become commonplace. In addition, no-fee checking would more than likely disappear, along with various rewards programs as banks look to make up for income lost following the Durbin amendment.
Price controls don’t work
Price controls haven’t worked in the past. The blog Wizbang uses the example of the prices of gas in Hawaii. Australian legislation from 2003 is an example. Then the retailers decided to charge more for plastic and has continued that way. 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.
Citations
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
