Dana Perino, previous 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 a lot more expensive. To be a lot more accurate, it will actually affect nearly all consumer purchases and debit card interchange fees will be the cause, claims Perino.
Debit card interchange fees mean instant cash loans for banks
Courtesy of an unheralded amendment to the financial reform law as it is being pushed by Illinois Senator Dick Durbin, the Federal Reserve would take control of fast cash loans debit card interchange rates. As Dana Perino says they are, 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 extremely difficult for these smaller banks to offer the essential 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 many of these cases, this would drive them to larger, more impersonal 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 small cash loans quick unsecured loans for all of their transactions, which offer no insurance on the back end in the event of fraud.
Financial reform advanced by Dick Durbin’s amendment
Consumers have the pictures painted for them by Dana Perino also. Imagine what retailers will do if debit card transactions cost them a lot more. Customers could have the cost passed to them. Some of the 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.
Controls on price don’t work
Price controls of this nature have not found much success, historically. The blog Wizbang uses the example of the prices of gas in Hawaii. Dana Perino points to Australian legislation from 2003. Then the retailers decided to charge a lot more for plastic and has continued that way. What Perino and many other concerned consumers are 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 unsecured personal loans 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
