These days, cash is no longer king. It's the debit card that rules the land. Banks have made it so easy to whip out a debit card to pay for items as small as a pack of gum, so keeping cash on hand is less and less of a necessity.
It's amazing the number of vendors who take debit cards. A dress made by a local designer selling at a roadside bazaar can be paid for with a debit card thanks to products you can now attach to your phone. A debit card is a single, waterproof, convenient method of payment that people pull from their wallets millions of times a day.
However, it is highly possible that in the very near future, many will be hesitant to swipe their debit card. Federal regulations are requiring banks to charge vendors less for each debit card transaction, which is currently a steep rate. But banks are unlikely to take this change lying down. Experts predict that, just as you might expect, banks will be passing this loss in revenue on to you, the consumer:
Already, JPMorgan Chase & Co., Wells Fargo & Co. and many other banks are reducing or phasing out rewards programs that gave users cash back for using debit cards. Chase has been testing a monthly $3 fee for debit cards in some states, and Bank of America Corp. and Citigroup Inc. have added new fees to some checking accounts.
At least one credit union has capped debit purchases at $300 a day, and most of the nation’s 7,534 banks and thrifts are testing or plan to test consumer reaction to new fees or limits on debit cards or the checking accounts to which they’re linked, said Richard Hunt of the Consumer Bankers Association.
Industry consultant Michael Moebs predicted the typical cost to consumers might approximate a Sam’s Club or Costco membership, about $36 a year on average.
With the economy showing little signs of improvement, Americans are still living paycheck to paycheck, cutting spending to the bone, and if using debit cards to buy necessities means a new line in the budget just for bank fees, how will the working poor fare? And will banks be transparent about new fees when using debit cards.
A lot of this is pure speculation, but banks do have a history of not being exactly forthcoming. They also have a history of bilking customers out of essential "nominal" fees.
Let's hear from you on this issue. Do you use your debit card often? Always? Rarely? And do you expect to see changes to your fees associated with that use? Just let us know in the comments below.
[Photo by Bryan Rosengrant]