Do you use a debit card?
Did you know each time you use it the merchant gets charged with swipe fees?
Every time you swipe with a debit card to pay for gas, groceries, or a latte, your bank charges the merchant a “swipe fee” for the transaction.
The maximum swipe fee banks could charge for each transaction went down in 2010 from 44 cents to 21 cents.
They may go down even farther, as a recent federal court ruling made it possible for the maximum amount to go even lower.
How lower swipe fees will affect consumers
Lower swipe fees for the places you shop should mean lower prices to you, or at least it should make retailers be more willing to let you use your debit card to make even the smallest purchases.
Someone has to pay for the cost of debit card transactions, however.
Ultimately, if banks can’t charge as much to the retailers, they’ll find a way to charge you.
If they can’t find any way to make debit card transactions profitable, they may discourage it altogether.
We’ve already seen how banks compensated for the reduction in debit fees two years ago.
Banks raised everything from overdraft fees to checking account charges. Many services we used to take for granted, such as coin counting, now cost money.
It’s difficult to predict how else the market will adapt, but debit cards aren’t likely to go away. We can hardly go back to paper checks.
Paper checks are a hassle for retailers, and a percentage of them always bounce. We’d hate to start writing checks at the grocery store again – or waiting in line behind people who are writing checks and having them approved.
It’s more likely that banks continue to find ways to charge more elsewhere if the amount they can charge retailers for debit transactions continues to go down.
What can consumers do?
As a consumer, you can protect yourself from most rising fees by paying closer attention to what you are being charged.
Read your statement every month, and make sure you understand it.
Routinely compare checking account plans at your bank, or at other banks or credit unions, to see if you can save money.
Instead of paying someone to count your coins, keep some in your purse or pocket and use them to buy coffee and other small purchase. And keep close tabs on your balance, so you never, ever risk having a negative balance.
The banks can raise overdraft fees all they want, but it won’t cost you a dime if you’re never overdrawn on your account.
Are you likely to spend more money when you have cash in your pocket, or when you’re just swiping your debit card?