Despite new regulations, debit card fees may grow next year
In recent months, many consumers have begun to favor debit cards over credit options when making purchases; however, a new report suggests when it comes to plastic, no one option holds the key to erasing debt.
In fact, debit card use may still cause costly overdraft fees, even with the recent Federal Reserve regulations to curb the practice.
By the end of the year, the lending industry is on pace to earn $35.4 billion by collecting these fees, a figure which is estimated to rise to $38 billion next year, The Washington Post reports. If debit card use continues to expand, 2011 could be the biggest fee collecting year on record for these institutions.
“My experience with helping people with their budgets and debt has taught me that debit card users don’t necessarily stay within their budget,” Matthew Shay, president and chief executive of the National Retail Federation, told the Post. “They may not accumulate the kind of debt you find on a credit card, but they can still overspend.”
One reason for the added revenue is increases in overdraft protection prices, the news source says. Despite this, more than 40 percent say they plan to use debit cards for payments this holiday shopping season.