{"id":560,"date":"2011-10-01T10:11:32","date_gmt":"2011-10-01T15:11:32","guid":{"rendered":"http:\/\/www.nathanhunstad.com\/blog\/?p=560"},"modified":"2011-10-01T10:15:12","modified_gmt":"2011-10-01T15:15:12","slug":"hidden-versus-visible-fees","status":"publish","type":"post","link":"https:\/\/www.nathanhunstad.com\/blog\/2011\/10\/hidden-versus-visible-fees\/","title":{"rendered":"Hidden versus visible fees"},"content":{"rendered":"

Congress has capped the interchange fees that banks can collect from retailers for debit card transactions. As a result, some banks are now charging customers directly<\/a> for the use of a debit card, up to several dollars a month. This has prompted some people to blame Congress<\/a> for the increase in fees. And while it\u2019s true that Congress did pass the regulation capping interchange fees, this change is a good one, not a bad one.<\/p>\n

<\/p>\n

Prior to this regulation, interchange fees were totally hidden from consumers. Retailers paid them but couldn\u2019t charge customers more for using debit cards, and banks pocketed the money. Few people outside of the industry had even heard of interchange fees. When fees are hidden in this way, it is impossible for the market to work properly: consumers can\u2019t decide how to best spend their money. If you didn\u2019t use debit cards, you were essentially subsidizing those who did.<\/p>\n

People are arguing that these news fees are a net negative for consumers, because retailers aren\u2019t going to be lowering their prices due to lower interchange fees. In the short term, perhaps that will be true. But consumers will benefit in other ways. Some retailers who chose not to accept debit cards in the past due to high fees may now accept them. Those who never use debit cards will no longer subsidize those who don\u2019t. Banks that charge fees for debit cards may lose customers to those that don\u2019t.<\/p>\n

It\u2019s also important to remember that a lot of the perks that banking customers have received in the past have been ill-gotten. Critics of the new debit card fees argue that the change hurts low-income customers the most. Perhaps, but so did other bank revenue-raisers of the past, such as reordering transactions to maximize overdraft fees<\/a>, or just charging high overdraft fees outright. All those reward cards and benefits cost money, and more often than not, the money has come from low-income consumers. It may not be fun to lose those rewards, but I\u2019d rather lose rewards than let banks continue to prey on those people who live from paycheck to paycheck.<\/p>\n

Finally, it should be noted that using debit cards is often the worst way to pay anyway. Credit cards offer far more protections in case the card is lost or stolen, and as long as you pay off your balance in full every month they don\u2019t cost a dime in interest. For people who don\u2019t want to use credit cards, just pay in cash: it\u2019s essentially what a debit card allows you to do anyway. Since banks aren\u2019t charging their customers when they use their cards to withdraw money from an ATM, just get the cash.<\/p>\n","protected":false},"excerpt":{"rendered":"

Congress has capped the interchange fees that banks can collect from retailers for debit card transactions. As a result, some banks are now charging customers directly for the use of a debit card, up to several dollars a month. This has prompted some people to blame Congress for the increase in fees. And while it\u2019s… Continue reading Hidden versus visible fees<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4],"tags":[276],"class_list":["post-560","post","type-post","status-publish","format-standard","hentry","category-politics","tag-economics","entry"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/posts\/560","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/comments?post=560"}],"version-history":[{"count":1,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/posts\/560\/revisions"}],"predecessor-version":[{"id":563,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/posts\/560\/revisions\/563"}],"wp:attachment":[{"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/media?parent=560"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/categories?post=560"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/tags?post=560"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}