Saturday, October 1, 2011

Charge it Forward

Said the Fed to the banks: "If you please,
Shrink your debit-card interchange fees."
Said the bankers, compliant:
"We'll look to the client
To offset the revenue squeeze."

New, lower federal limits on the interchange fees that banks may charge merchants on debit card transactions have gone into effect; but, like squeezing a balloon, such price controls will often raise prices elsewhere. Accordingly, banks have begun to roll out fees for their customers who use debit cards. First off the starting blocks was Bank of America, which announced a $5 monthly fee, while Chase is testing a debit card fee in selected markets. Other financial institutions such as Citibank and USAA have seized the opportunity to set themselves apart as "no-fee" providers, though experts warn that these banks may burst their customers' bubbles if they find it necessary to charge fees at a later point.

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