The Federal Reserve proposed a 12 cent cap on the fees banks would be allowed to charge merchants for debit card transactions, a move that could cut into the revenue for banks that issue debit cards.
Capping debit interchange fees, sometimes called swipe fees, would help merchants by replacing the current system, in which they generally pay between 1 percent and 2 percent of the dollar value of each transaction.
The Federal Reserved said consumers would not likely see a swipe fee cap translate into lower prices, except in some highly competitive markets. It may, however, result in banks cutting back on debit card reward programs or searching for other ways to offset the impact of lower fees.
The new set of credit card restrictions approved have gone into effect. The rules block credit card companies from charging more than $25 for late payments except in extreme circumstances, prevent them from charging customers for not using their cards, and requires them to reconsider rate increases imposed since January 1, 2009, according to the Federal Reserve, which approved the regulations.
Every time you buy something with a credit card or a debit card, the retailer you buy it from doesn’t get the full amount of the charge. Visa and MasterCard collect an interchange fee of up to 2.95% plus a small fixed amount per transaction.
For the most part, we never seen the direct impact of interchange fees. The agreements that merchants enter with Visa and MasterCard don’t allow them to tack on interchange fees as a surcharge to customers, and although offering a discount for cash is permitted, cash discounts haven’t really caught on outside of gas stations.
Therefore because we never really see a direct impact on the interchange fees, we may never see any direct benefit from all the proposed legislation that attempt to limit such fees.
Some argue that by reducing their interchange fee expenses, retailers will be able to pass on savings through lower prices. But given how the charges were hidden from consumers in the first place, struggling businesses are more likely to keep the savings to boost profits or cut losses rather than passing them on.
In fact, if legislation is passed to limit credit card interchange fees, then some consumers could end up being worse off. Interchange fees help provide funding for the credit card rewards that so many people get from their cards. Yet as we’ve already seen during the financial crisis, falling bank profits have started eating away at issuers’ willingness to continue rewards programs. With another source of revenue under attack, it’s even more likely that customers will face annual fees and other direct costs to offset lost interchange fee income.
Visa Inc. and MasterCard Inc. are the world’s biggest payment networks in the world. Today, the two entities may raise antitrust concerns if they “collude” with larger banks to block limits on debit- card interchange fees and scared off small banks into joining the opposition, according to a U.S. Senator.
Senator Richard Durbin stated, “If your companies were to coordinate such punitive actions in the same way that you appear to have coordinated your messaging tactics, serious concerns would be raised that you are engaging in an unlawful restraint of trade,” in a letter to the chief executive officers of San Francisco-based Visa and Purchase, New York-based MasterCard.
Senator Durbin is pushing legislation that empowers the Federal Reserve to impose limits on debit card interchange or “swipe” fees that merchants pay to accept the cards.
Curbing the fees, which average about 1 percent per transaction, could crimp revenue at Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co., the biggest U.S. debit-card issuers.
The Senate voted 64 to 33 to approve the measure as part of the financial overhaul bill. The proposal becomes law if it survives a bipartisan panel assigned to merge the House and Senate versions of the legislation, and President Barack Obama signs it. Representative Carolyn Maloney, a New York Democrat nominated to participate in the talks, said she expects changes in Durbin’s proposal, without elaborating.
Unless you have a poor credit history, there is no reason to pay annual credit card fees. A host of Visa, MasterCard and Discover cards have no annual fee, yet many people pay up to $100 a year for the privilege of holding a credit card. Unless you’re an ultra-wealthy, exclusive holders of an elite-level credit card with exclusive perks, most people should not be paying annual credit card fees.
And speaking of credit cards, make sure you make a payment on time every month, even if it’s the minimum. Many credit cards charge $39 monthly late fee charges, charges which accrue interest along with your existing balance.
The Federal Reserve today issued sweeping new rules to protect Americans from sudden hikes in interest rates on credit cards.
The new rules, which take effect on Feb. 22, generally bar rate increases during the first year after an account is opened. After the first year, companies must provide customers with a 45-day notice before bumping up rates.
Some credit card companies have pushed through rate increases ahead of the new rules. So check your account to see if that happened to you.
The new rules also will ban – increasing the rate on existing credit card balances. For instance, if a customer is behind more than 60 days on a payment, the rate on the existing balance can be boosted.
Credit card companies also will be required to obtain a customer’s consent before charging fees on transactions that exceed their credit limits and will forbid companies from issuing credit cards to people under the age of 21 unless they or a parent or other co-signer have the ability to make the required payments.
Payments will be applied to highest interest-rate balances first, helping customers pay off their balances faster and more cheaply. And, due dates will be the same every month, eliminating confusing cut-off times for payments.
The Federal Reserve wrote the rules to carry out provisions of legislation passed by Congress and signed into law by President Obama last year. Other provisions of that law are slated to go into effect later this year.
Welcome to Credit Card Overcharges. Are you a victim of random and excessive fees imposed by your credit card companies. Has Visa, Mastercard, American Express, and Discover and the banks that gave you your credit card, imposed ridiculous charges upon you.
Like all American, during these tough times, we start to pay more and more attention to our credit card statements because we have less money to waste. As we review our statements closer and closer we begin to notice charges and fees that we never realized existed.
The purpose of this website is to inform people of these overcharges. To provide a forum where we can collective provide information for each other to use to fight back. We hope that you will find your goals useful.