Dana Perino, former White House Press Secretary and current Fox News commentator, warns consumers that there’s trouble brewing in Congress. This could mean that having and using a debit card is really more expensive. To be clear, it will actually affect almost all consumer purchases and debit card interchange fees will be the cause, claims Perino.
Debit card fees might mean instant cash loans 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 cash loan debit card interchange rates. As Dana Perino like to describe 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 very 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 cases, this would drive them to larger, a lot more impersonal banks that won’t have as much competition and can charge a lot more for credit services. All of the consumers who balk at this can have to rely on cash, checks or fast cash advance for their transactions, which offer no insurance on the back end in the event of fraud.
Dick Durbin’s amendment sullies advances in financial reform
Consumers have the pictures painted for them by Dana Perino also. If debit card transactions cost them more, imagine what retailers would do. The cost can be passed to consumers. 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 don’t seem to work
Historically, price controls like this haven’t worked. The blog Wizbang uses the example of past gas prices in Hawaii. Dana Perino points to Australian legislation from 2003. At that time, retailers started to charge extra for consumers paying with plastic, and the trend has continued. What Perino is 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 loan with no credit check a lot 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
