Debit Card Changes

Guest post: FDL BSN

Yep, after months of wrangling over sections of the “sweeping regulatory reform of 2010″ now known as Dodd-Frank, a few more decisions are now final.

If you’ve paid attention at all to Washington DC and it’s constant noise, it’s been the faltering debt/budget talks that have taken all the oxygen out of the capital.

And with all that hot air, that’s sayin’ sumpin…

These regs being written have been snuck  in without much notice.

Unnoticed unless you owned one of the many fine restaurants supported by all the lobbyist’s doing their thing on both sides of the issues!

Whining and dining, keeping  DC  hoppin and boppin like a gold rush town.

But in reality this set of rules will affect many of us more than the debt ceiling debate.

The original bill would have dropped debit card swipe fees from as high as .44 to a cap of  .12.

After much haranguing by  the end of June, 2011, the Fed voted to cap the swipe fees charged retailers to roughly .24, with the change to be implemented in October rather than July, 2011.

What’s the swipe fee big deal?

• Predictions are that, coupled with the lack luster economy, the changes will result in a $16.4 billion annual loss of revenue for debit card issuers.

• Although usually, unnoticed Americans pay two times more in swipe fees than they do in late fees and three times more than ATM fees.

There’s a lot at stake here.

What does that mean to you and me?  One word defines the results:

FEES

Consumers will pay new and improved fees to make up the difference in the cap on swipe fees:

• Checking:  Unrestricted free checking accounts are becoming dinosaurs.
• Credit card interest rates:  You guessed it, higher.
• The cost of goods:  There is mixed data on this, but studies show that at .21 per swipe, this may be negligible.
• The end of debit card reward programs.
• Consumers fees:This is a warning.  Be on the lookout for new and increased fees.

Other changes brought about by the 2,300 pages of Dodd-Frank’s  sweeping credit/regulatory reforms of 2010:

• Issuers are prohibited from raising interest rates on a balance in good standing.
• Payments greater than the minimum must go toward the highest-rate interest balance first.
• Penalty fees are capped
• Credit available to young adults is limited.

These changes are credited with a reduction in credit card debt and consumers who are more aware of the cost of carrying a credit card balance.

It’s those pesky fees that will be changing to make up for the new regulations that we gotta’ watch for.  If you carry credit and/or debit cards, as the dust settles after the latest bluster, you may decide what’s in your wallet is no longer working for you.

Keep your eyes and ears open and focused!

{photo credit: moneyblognewz c.c.}

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