If you use a debit card – and more Americans now use debit cards than credit
cards – then you may be in for a big surprise when you get your monthly
statement from your bank.
Sara Parker from Utah Central Credit Union explains what it’s all about.
Because of new federal guidelines that took effect this month, more banks
have announced they will start charging monthly fees when customers use
debit cards. In the past, these transaction fees were paid by companies and
merchants. Now the burden is being shifted to card users.
· In July, 2010, Congress passed a new law (the Dodd-Frank Act) to reform
the financial community.
· At the last minute, an amendment was added to the bill requiring the
government to set a limit on fees charged every time a debit card is swiped.
· These fees have typically been about 44 cents. But the Federal Reserve
stepped in and capped the fees at 21 cents.
· Retailers immediately said they would pass the savings on to consumers.
· Banks said they would start charging customers monthly fees on their
· In the middle of this brouhaha are credits unions – which seem to have
been spared. Financial institutions under $10 billion assets – and that
includes all but three credit unions – are exempt from the rule.
So for now, if you keep your money at a bank, you’re probably going to see
monthly debit card fees. These fees can range from $5 to about $3. If you’re
at a credit union, you probably won’t see those fees. At Utah Central we
won’t be charging monthly fees for using debit cards.
In defense of the banking industry, one estimate said banks would lose $6.6
billion in revenues. To offset the losses, it’s been reported in The New York
Times that banks are also starting to charge for online banking, increasing
ATM fees, and canceling services like free checking or rewards club bonuses
to make up the difference. Some have threatened to cap debit card
transactions at $50-$100 which would limit the size of purchases. At least
one major bank announced it would not add debit card fees – but most are.
And American Express is launching a pre-paid debit card.
One expert was predicting that the domino effect of all of this is that
consumer would pay more for checking accounts or resort to prepaid debit
cards. So it will be interesting to watch.
There is some good news. This is a great time to take advantage of favorable
Interest rates on credit cards. At Utah Central our rates vary from 9.75% to
11.90% — depending on whether you have a VISA classic, a VISA platinum or
a VISA preferred. The Average APR on credit cards in the U.S. as of May,
2011was 13.10% and the average APR on new credit card offers is typically
14.89%, so you can see that switching your cards to Utah Central will save
you money. (Source: Creditcards.com and Federal Reserve G 19 report.)
Also, at Utah Central there are no transaction fees, no annual fees, and no
minimum finance charges or fees for cash advance.
So if you’re using a credit card, it might be a good idea to check on what
your current interest rates are and what type of fees your incurring for using
For more information, visit your local Utah Central Credit Union branch or
visit them online at