What does the Fed's cap on debit card fees mean for you?

By: Sara Shookman Email
By: Sara Shookman Email

KNOXVILLE, Tenn. (WVLT) -- Rules put in place last year to protect you from debit card fees will go into effect as planned.

Wednesday the U.S. Senate voted to let the Federal Reserve cut fees that stores pay each time you swipe your debit card. The move hands retailers a victory over banks in a battle worth $16 billion a year.

The policy was designed to protect you from higher prices to cover the store's fee. But one consumer advocate tells Volunteer TV you may end up paying another way.

Statistics show you've probably got a debit card in your wallet, and you use it too.

"It's easy. I don't have to dig for change or anything like that. I can just pull out the card, swipe it and go," said Brenda Johnson, a debit card user.

"Probably five times a week. Gas, groceries, so forth," said Joyce Kent, another debit card user.

Like these ladies, Mary Emily Morris says her debit card is a go-to form of payment. "I use it to buy groceries, of course trips to Target, really anywhere I can use Visa or MasterCard I use my debit card. It's just convenient," said Morris.

But for stores, every transaction costs. Now the Federal Reserve will slash the fees stores pay to banks and credit card companies to 12 cents from 44 cents per transaction. It's a measure passed in the Consumer Protection Act of 2010 to save you money.

"Those transaction fees are passed along to us every time we make a purchase," said Daru Burdge, the regional president of CredAbility.

Consumer advocates say capping fees could end up making your quick swipe cost a little more.

"Consumers will pay one way or the other," said Burdge. She says you'll likely see some savings through lower prices. But banks say they'll be forced to make up the money through other fees -- like ones they may tack onto your card.

"There is a fear that they will pass fees along in other areas. For instance, maybe you'll have an annual fee for your debit card or other fees," she said.

That might push some users back to cash. "I'm not in favor of annual fees and I wouldn't use it," said Kent.

"I'd be more cautious than I am now," said Johnson.

For others like Morris, "It is a convenience that I would keep."

A spokesperson for TVA Credit Union tells us there's a lot of questions about how the policy could affect banks and their customers that are still unanswered. The policy is scheduled to go into effect July 21.

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