Source: Herb Weisbaum / MSNBC
Debit cards are no longer the darling of the banking industry. That’s because new federal rules limit the “swipe fee” big banks are paid when you use their card. This could lower industrywide revenue from debit cards by billions of dollars a year.
One way some banks hope to get that money back is to charge their debit card customers a monthly fee. Another is to boost credit card use.
“We really think banks are hoping that the alternative people choose in place of the debit card is a credit card,” says Bill Hardekopf, CEO of lowcards.com. “Why? Because banks make a lot more money every time we use a credit card than when we use a debit card.”
Until now debit cards have been a cash cow. Every time you used the card to buy something, the merchant paid the bank that swipe-fee which averaged 44 cents. Those days are gone. As of October 1, a new rule from the Federal Reserve caps debit card swipe fees at around 24 cents per transaction. According to Bloomberg Government, that could cost the nation’s big banks as much as $8 billion a year.