‘From the Capitol’ Nickel-and-Dimed by ‘Swipe Fees’

Many of you have likely heard about the recent changes to banking regulations, and more importantly, what that means for you and your family.

Due to federal legislation that was implemented last year, some banks will now be charging a new fee when you use your own, hard-earned, money. So, at a time when taxes are high and increasing, unemployment remains at 9 percent, and many are all just beginning to recoup losses from the recession, our banks feel that they can take more from us.

Unfortunately, this all came about due to an increase in government regulation, or more specifically, it has come about in the wake of the Dodd-Frank financial regulations overhaul. Included in the overhaul is a provision that was aimed at supporting businesses by regulating what banks can charge. The provision worked to cap the fee banks are allowed to charge merchants when customers make purchases with a debit card. Banks are now only able to collect 24 cents per debit transaction from merchants, rather than the prior amount of 44 cents. Although this seemed like a positive, protective provision, it turned out to be a poorly thought out regulation – and one that will trickle down into our pockets and our family budgets.

Many of our country’s most profitable banks claimed that that Dodd-Frank overhaul would cause a multi-billion revenue loss to the industry and have decided to begin implementing a new fee to account for this ‘lost’ revenue. So, you and your family, can now expect to see what’s called a ‘swipe fee.’

Beginning October 1st some banks – those with $10 billion or more in assets – began introducing this new swipe fee. Bank of America, which has obtained the most media attention thus far, has made statements indicating that their swipe fee will amount to a monthly $5 fee for customers who use a debit card for any purchases. Going forward, it is more than likely other banks will take this as an opportunity to bolster their revenue as well.

The Wall Street Journal reported what consumers can expect and stated that Bank of America:

• Will start the new fee in early 2012 for a variety of consumer checking accounts;
• Will apply the monthly fee to debit cards used for purchases (which is the purpose of the card);
• Will NOT apply the fee to ATM withdrawals;
• Will NOT apply the fee for simply “holding” a card; and

Statements have also been made indicating that banks will likely eliminate this fee for customers that carry a higher monthly balance – again, meaning those families who can afford the fee least will pay the most.

These fees exemplify what is wrong with government regulation and big business. People across Connecticut and the country who are working to cope with the effects of the recession will now be further penalized when going to use their hard-earned money – the same money that keeps our banks in business. Until states, including our own, decrease taxes and until the federal government repeals laws that harm consumers and families, we will all continue to be nickel-and-dimed.

This type of action is egregious and regressive, plain and simple. I urge those of you looking to switch banks to look at all fees any bank assesses before making the decision to change-over.