Durbin And The Affect On Consumers

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The Durbin Amendment to the Dodd Frank Act, went into effect on October 1, 2011.
The purpose of this legislation was to put a cap on debit transaction fees that processors can charge their merchants when accepting debit or check cards for the payment of goods/services.
Consequently, this cap has put some big hurt on card issuing banks by greatly reducing the revenues they receive on these transactions.
You see, every time you use your debit or credit card, the card issuing entity receives what is referred to as an Interchange Fee.
As a result of this lost revenue (reported to be in the multiple billions of dollars) most banks are looking for, or already have, initiated other fees or eliminated rewards on these cards to make up for the loss.
To give you an example, Bank of America has announced that it will be charging customers a $5 monthly fee for the use of debit cards.
Now there may be some other various fees or the possibility of the elimination of those fees for certain deposit levels for example.
But, let's just use that $5 figure for a minute.
Would this fee levied to your account, cause you to personally stop using your debit card or look for another bank to do business with? For me, while I certainly don't like paying banks more money than necessary to use MY MONEY, but let's be realistic here.
I use my debit card for most transactions whether it be for gas, food, entertainment of whatever.
And, between my wife and I, we certainly rack up at least 50 debit transactions a month.
So, this $5 fee would come to $.
10 each.
Since I utilize Quicken and log all my transactions each month, I'm more than willing to pay a $5 monthly fee for this continued convenience.
The reports I am able to generate, for budgeting and tax purposes, are of great help to me.
So, will monthly fees stop me from using my debit card..
..
not likely, unless it gets more expensive than the benefit I currently receive.
This Durbin Amendment is meant to reduce fees to merchants for processing debits.
This reduction, legislators hope, will translate into reduced prices for goods and services passed on to customers.
If this proves to be anything like what happened in Australia in the 1990's, when they capped debit interchange fees, it will have an opposite effect.
In Australia, debit rewards programs disappeared, issuers began charging card holders more to use debit cards (much like we're already beginning to see here in the US) and the end result was that prices went up at the point of sale.
Only time will tell what the eventual outcome will be.
In the meantime, keep your eyes open and make certain you get complete clarification of any fees being charged by your bank for the privilege of accessing and using YOUR MONEY.
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