Law to lower debit card fees costing consumers
SAGINAW -- Fines, fees, and surcharges are making their way into your bank accounts.
NBC25 found out it’s because of a new law meant to protect consumers, but some say it’s a bad deal.
Debit card rewards and free checking accounts may soon be services of the past.
"It’s just frustrating," said Sara Everts, a United Financial Credit Union member.
A federal law set to take effect this July would cap fees financial institutions charge businesses every time a customer uses their debit card.
The law only impacts big banks, but credit unions say they'll have to lower their debit card fees to stay competitive.
Under the proposal the fee would be capped at 12 cents instead of about 44 cents.
“There’s barely a competitive edge on rates anymore, so the place that we can be competitive is in our fees and unfortunately it could drive us to be like the banks," said Barbara Applod, the Executive Vice President of United Financial Credit Union in Saginaw.
Applod says debit card fees pay for half the program, so to offset that expense they'd have to make cuts.
"We offer surcharge free ATM's, we offer free debit ATM cards…we might have to re-evaluate all those services including free checking," said Applod.
Something this new mom doesn't like to hear.
"We just had a baby four months ago and now we have more expenses than before," said Everts.
However, the law is meant to save consumers money hoping merchants will lower the cost of their goods if they pay less fees.
"Even if they do lower the price of the goods to the consumer we are still going to have to make up that interchange and it’s almost like taking from one pocket to the next," said Applod.
But the Baywood Lounge says saving on swipe fees is a big deal.
Until a few months ago they only accepted cash, because it’s hard to make profit on small ticket items. But they got a debit machine anyway.
"People use credit cards or debit cards all the time now. We were starting to lose customers or people were scrambling for change," said Cristina Spear, a server at Baywood Lounge.
According to the Federal Reserve, debit card transactions were about 8 billion in 2000, and that increased to about 38 billion in 2009, making debit cards one of the most popular forms of payment.
That’s why United Financial Credit Union says they'll still offer a debit card even if they can't afford it.
Right now lawmakers are deciding if they want to delay the law for two years until they figure out how it will impact the consumer.
If credit union members would like to put their two cents in about this issue, go to www.savemyfreechecking.com
Do you think the new rules are protecting or harming the consumer?
