Better Business Bureau
Are you in love with using your debit card? It’s accepted by every retailer that accepts credit cards. It’s convenient to use and there are no fees or interest that you have to pay for using it. Plus, many stores allow you to get cash back with your purchase. What could be easier?
“In the past few years, the debit card has become the alternative to credit cards for many consumers,” said BBB President Tom Bartholomy. “By paying with your bank debit card, you limit your spending to the money in your bank account.”
Debit cards also save consumers money. Unlike credit cards, there is no credit limit you can exceed. “Debit cards provide you the same convenience of credit cards without incurring debt with interest rates as high as 33 percent,” Bartholomy said, “and you don’t rack up over-limit and late payment fees.”
Starting Saturday, it is going to cost you a little more money to use your debit card. A new Federal law takes effect on Oct. 1 that limits the amount that banks can charge retailers for every debit card transaction.
Previously, banks charged retailers an average of 44 cents per debit card swipe. The new law caps the amount that banks can charge retailers to 21 cents per debit card transaction. This law is great for retailers, but bad for banks.
According to the BBB, many banks are changing the terms of their debit card programs. In order to recoup lost revenue from retailers, banks will charge you more to use your debit card.
Some of the changes include:
1) Monthly flat fees – Your bank may charge you a monthly fee that ranges from $3 to $5 to use your debit card, except for transactions at your bank’s ATM machines.
2) Rewards programs – Earning frequent flyer miles or getting other rewards for using your bank debit card costs the banks money. These programs will likely be eliminated.
3) Per transaction fees – If your bank does not implement a monthly flat fee for debit card transactions, you could be charged a small fee of 10 to 25 cents every time you use your debit card.
4) Higher minimum balances – Your bank may raise the minimum amount that you are required to keep in your account to avoid additional debit card fees.
The BBB has this advice for consumers:
1) Check with your bank. You can visit your bank’s website or call their customer service number to find out what new charges you may incur for using your debit card.
2) Consider changing your spending habits – If you get cash from your bank’s ATM to pay for purchases instead of using your debit card, you can avoid incurring the additional fees. “However, you lose the convenience that the debit card provides,” said Bartholomy.
“Convenience has a price,” Bartholomy added, “and consumers will have to decide how much they are willing to pay for the convenience of using a debit card.” For more information, please visit www.bbb.org.