Former White House Press Secretary and current Fox News commentator Dana Perino warns consumers that there’s trouble brewing in Congress. This might make using a debit card more costly. It will really affect nearly all consumer purchases and debit card interchange fees will be the cause, claims Perino.
Payday cash for banks by debit card fees
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 says they’re, 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 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 the income stream, smaller banks would have no choice but to pass on the cost to customers. In many of these 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. Consumers who balk at this could have to rely on only cash, checks or payday cash short term loan for all of their transactions, which offer no insurance on the back end within the event of fraud.
Dick Durbin’s amendment sullies advances in financial reform
Dana Perino paints the picture for consumers on the retail end also. Imagine what retailers will do if debit card transactions cost them a lot more. The cost can 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 after the Durbin amendment.
Controls on price don’t work
Historically, price controls like this haven’t worked. The blog Wizbang uses the example of past gas prices in Hawaii. Australian legislation from 2003 is an example. Then the retailers decided to charge a lot more for plastic and has continued that way. 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 quick unsecured 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
