Sign in to follow this  
The Irish Doggy

Yet another reason not to use a debit card...

Recommended Posts

thank you, wal-mart! :wacko:

 

the real culprit is Walmart and the retail lobby, which used government to squeeze banks and fatten their own bottom line. Walmart won, banks lost, and now customers are stuck with a new monthly fee.

 

Here's the background: Whenever you use a credit card or debit card to buy something at a store, the credit card processor (like Visa or Mastercard) and the issuing bank (like Bank of America or Chevy Chase Bank) both take a cut. The store may only get $9.70 on a $10 purchase.

 

How is that rate -- the "interchange fee" -- set? Until this year, it was set by market forces. Visa and Mastercard offer stores a service that facilitates sales and brings in more business. In return, they demand a cut of the sale. Walmart and Joe's Corner Store aren't required to accept debit cards or credit cards, but they do, which means that they decided the price was worth it.

 

Retailers, of course, wish the card issuers and processors would provide this service for free. Businessmen are always looking for a better deal. The businessmen in this case decided to employ regulatory robbery to get their way. Led by Walmart and the Retail Industry Leaders Association, retailers pushed for a federal cap on interchange fees.

 

When the Dodd-Frank financial regulation bill came up, Sen. Dick Durbin introduced an amendment giving the Federal Reserve the authority to cap the interchange fee on debit cards (but not credit cards). Durbin painted himself as the scourge of the special interests, because he was battling against the banks. But some other special interests were firmly in Durbin's corner: the big retailers.

 

Melissa Merz, a former press secretary for Durbin, lobbied for Walmart on the financial regulation bill, as did former Durbin legislative aide Donni Turner. The Durbin alumna were both at the Podesta Group, and the firm's lobbying filings indicate both lobbied on "Senate financial services regulatory reform legislation."

 

At the same time, these retail lobbyists were helping fund Durbin's campaign. Daily Caller reporter Jonathan Strong wrote "one month after the Dodd-Frank financial reform bill passed, both of those former aides, Melissa Merz and Donni Turner, attended an Aug. 10 fundraiser for Durbin hosted by the Podesta Group. A group of lobbyists mostly from the Podesta Group gave Durbin $5,000 on Aug. 10 and a $5,000 check from Walmart's PAC cleared shortly afterward, on Aug. 27."

 

The returns to the retail industry were huge. As the Federal Reserve prepared its rules setting the maximum per-purchase interchange fee, a Home Depot executive told investors on a conference call "Based on the Fed's draft regulations, we think the benefit to the Home Depot could be $35 million a year."

 

That $35 million Home Depot gain is a $35 million loss for banks and credit-card processors. Their interchange revenue was central to the business model that allowed banks to offer free checking and free debit-card use.

Share this post


Link to post
Share on other sites

Well I'm sure retailers had this fee built in to the price of their product. Now that their fees aren't so high if I follow the logic some have put out there regarding the effects of tax cuts on a business, I expect them to pass along the benefits of the cut with a combination of new employee hiring and lower consumer prices. Trickle down baby! :wacko:

Edited by CaP'N GRuNGe

Share this post


Link to post
Share on other sites
Well I'm sure retailers had this fee built in to the price of their product. Now that their fees aren't so high if I follow the logic some have put out there regarding the effects of tax cuts on a business, I expect them to pass along the benefits of the cut with a combination of new employee hiring and lower consumer prices. Trickle down baby! :wacko:

 

well no, because you'll pay more to your bank. still the same cost, they're just shifting it around.

Share this post


Link to post
Share on other sites
well no, because you'll pay more to your bank. still the same cost, they're just shifting it around.

 

I think Joe debit card consumer is worse off than that. I suspect Grunge's point is that retailers will not lower prices. As we saw in a recent thread that airline fees did not go down once a tax was removed, so will retailers keep prices the same and keep the extra couple points of margin. Joe debit carder will still pay the same price at the store and in addition will now pay the bank fees that were once built into that price. It's lose-lose courtesy of our US gov. :wacko:

Share this post


Link to post
Share on other sites
I think Joe debit card consumer is worse off than that. I suspect Grunge's point is that retailers will not lower prices. As we saw in a recent thread that airline fees did not go down once a tax was removed, so will retailers keep prices the same and keep the extra couple points of margin. Joe debit carder will still pay the same price at the store and in addition will now pay the bank fees that were once built into that price. It's lose-lose courtesy of our US gov. :rofl:

:bow: ............... :lol: ............. :rofl:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

.......... :wacko:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

:tup:

Share this post


Link to post
Share on other sites

When did people stop worrying about themselves and make financial decisions accordingly?

 

I see you young men so worked up about fees, or some government plan, or something else like the Wall Street thread. Why don't you simply worry about yourself, work as hard as you can, and be the best you can be?

 

If you're a man, be one.

Share this post


Link to post
Share on other sites
When did people stop worrying about themselves and make financial decisions accordingly?

 

I see you young men so worked up about fees, or some government plan, or something else like the Wall Street thread. Why don't you simply worry about yourself, work as hard as you can, and be the best you can be?

 

If you're a man, be one.

 

It's like rain, on your wedding day.

Share this post


Link to post
Share on other sites
on the other hand, the regulations did turn a somewhat hidden fee into an explicit one--so bank customers should have an easier time calculating which bank has the best prices.

 

If these fees are truly necessary to prevent bank losses, then all banks will adopt them at about the same level. If they aren't necessary, the competition caused by depositors changing banks should drive the fees lower (or to zero).

:wacko:

Bank of America revamping debit card fees

 

 

By Rick Rothacker and Joe Rauch

 

Fri Oct 28, 2011 7:43pm EDT

 

(Reuters) - Bank of America Corp, after receiving heavy public criticism for a planned $5-per-month debit card fee, is likely to give customers more ways to avoid the fee, a person familiar with the bank's plans said Friday.

 

The second-biggest U.S. bank is reworking its plans as rivals Wells Fargo & Co and JPMorgan Chase & Co have decided not to charge monthly fees, ending test programs in certain states.

 

Bank of America is likely to allow many customers to sidestep the fee by taking measures such as maintaining minimum balances, having paychecks direct deposited, or using Bank of America credit cards, the person said.

 

Under earlier plans, customers might have needed balances totaling $20,000 across all their Bank of America accounts to skip the fee.

 

Bank of America set off a firestorm of criticism from customers, consumer advocates and politicians last month when it disclosed plans to charge customers $5 per month for using their debit cards, starting sometime next year.

 

The goal was to make up revenue lost to a law that slashes the fees banks charge retailers when consumers swipe their cards.

 

While some banks have disclosed plans to apply similar fees, many banks and credit unions decided not to institute the charge and have encouraged customers to switch banks.

 

Charlotte, North Carolina-based Bank of America is not abandoning the fee now and will likely include it in new account types the bank is testing in three states. The bank plans to roll out these packages nationwide next year.

 

The $5-per-month fee may still remain an option for customers, the person said.

 

The bank has said the purpose of the new account types is to provide customers with upfront pricing, instead of hitting them with penalties after the fact. Customers can pay monthly fees of between $9 and $20, or avoid the charges by keeping minimum balances, using their credit cards or having a minimum amount deposited to their account.

 

Among other banks, Wells Fargo & Co said late Friday that in response to customer feedback it has canceled a five-state pilot program that would have charged customers $3 per month to use their cards

 

After testing a $3 per month fee in two states since February, JPMorgan Chase & Co has decided not to charge customers, a person familiar with the situation said on Friday. The test will end next month and will not be extended or expanded, the person added.

 

Citigroup Inc announced an account overhaul in mid-September that did not include a monthly debit card usage fee. Stephen Troutner, head of banking products for Citi's U.S. consumer bank, said at the time that the New York-based bank found customers were strongly opposed to such monthly maintenance fees.

 

Richard Davis, CEO of US Bancorp , said during an October 19 conference call with analysts the Minneapolis-based regional bank is monitoring the results of other banks imposing debit card fees. Davis did not rule out instituting a fee in the future, but said the bank has no immediate plans to do so.

 

"We will find out if customers complain and move, or just complain," he said. "We will take all that in time and we will make our decision."

 

SunTrust Banks Inc is charging a $5 per-month fee on everyday checking account customers who make purchases. A spokesman declined to comment on the bank's strategy.

 

Norma Garcia, manager of Consumers Union's financial services program, applauded JPMorgan's decision, but said that, without more details, it was unclear if Bank of America's changes would be better for customers.

 

"Clearly, there is overwhelming public support to drop the fee," she added.

Share this post


Link to post
Share on other sites
So the government regulation designed to prevent this kind of nonsense ended up triggering this kind of nonsense? Anyone with half a brain could have seen this result coming from a mile away. I'm curious whether this was by design or due to legislative incompetence.

 

By design. Retailers lobbied the legislators to get this little gem in so they wouldn't have to pay it. So instead of it being spread across all our retail purchases now everyone will get fees on their cards. Mine will be something like $12/mo.

Share this post


Link to post
Share on other sites
By design. Retailers lobbied the legislators to get this little gem in so they wouldn't have to pay it. So instead of it being spread across all our retail purchases now everyone will get fees on their cards. Mine will be something like $12/mo.

Switch to a credit union.

 

Almost all the banks have abandoned the direct fees.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.