Thursday, September 29, 2011

The New Debit Card Fees

Today we got yet another example of the unintended consequences of poorly-thought out and unnecessary legislation. Bank of America is now charging $5 per month for its debit cards, with other banks sure to follow suit. Why is it doing so? Awhile back, Congress, then led by Democrats, passed new regulations restricting the fees banks could charge merchants for accepting debit cards. The new restrictions go into effect on Saturday. Naturally banks are not going to passively accept a huge cut in income, and are now looking for ways to make up the difference from customers.

This is the sort of thing that happens when you have clueless government officials, primarily Democrats, interfering in business operations, and passing unnecessary regulations. If, like me, you make regular use of debit cards, you know they are extremely useful. One of the things that makes them so useful is the lack of fees. If they start to come with a monthly charge or other restrictions, they become another expense which lessens their overall utility.

You might wonder why it is any business at all of the government what fees banks should charge merchants for using debit cards. Why can't banks just set whatever fees they want and merchants decide whether or not they want to pay them, pass them on the customers, or reject them entirely? Was there some sort of major problem with debit card use that even required government action? No, there wasn't. There was no need whatsoever for this sort of overbearing big government regulation. And now consumers are going to pay for it. Here's one of the sponsors of the regulation, one of the biggest idiots in Congress, Democrat Dick Durbin of Illinois,
"After years of raking in excess profits off an unfair and anticompetitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers. It's overt, unfair, and I hope their customers have the final say."
What are "excessive profits" and who are you to decide what businesses should make? Bank of America is not trying to pad their profits, they are attempting to preserve them from being cut by arbitrary regulation. It may be "overt," but there's nothing unfair about it. Banks are not obligated to provide free debit card use. They were doing so until you decided to interfere. It's an obvious reaction to your attempt to slash their profits, one which was abundantly clear to anyone with the slightest clue when this legislation was under discussion.


  1. Weird, my credit union isn't doing this...

  2. Well, BoA just made its announcement. I'd expect smaller banks to wait and see if debit card fees become the new industry standard. Hopefully that won't happen, but this was predicted when that legislation was introduced.

  3. Banks simply looked for a loophole and found one. Debit cards are used mainly by those that don't have credit, either forced or by decision. On another site, it was being compared to the service fee that a repairman charges you. The problem with that is banks are "users" of your money, not providers of any noticeable repair or service, except the "perks" you get by using a certain bank. That is the bank's decision as to what they want to use to entice you to bank with them. So, when they decide to charge a fee for a use of your own money to make a profit, they are operating on a greed basis that will affect the "little" people.

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