New debit fee reductions could help consumers cut debt in 2011
Consumers concerned with their monthly budgeting received welcome news this month, as the Federal Reserve proposed rules that could cut debit card transaction fees by 90 percent.
Due to the rules, credit card companies such as Visa and MasterCard, the world’s largest payment networks, could face huge revenue reductions in 2011.
“These credit card giants and banks are imposing fees that are in no relation to the actual cost of processing, and the retailers and merchants have no way to bargain or even resist these increases,” U.S. Senator Richard Durbin, told Bloomberg. “This new law brings the Federal Reserve into the picture and changes that dynamic.”
If approved by the Federal Reserve Board, major issuers such as Bank of American, JPMorgan Chase and Wells Fargo could lose more than $15 billion in revenue next year, the news source says. However, the law does call for exemptions for smaller lenders such as community banks and credit unions, which will likely continue to grow as consumers are predicted to continue joining the groups in 2011.
While it is not clear when a decision could be reached, the new regulations would likely benefit budgeting consumers looking to save money and cut past debt during the new year.