Federal Reserve set to weigh in on debit fees

In recent months, many consumers have turned to debit cards as a way to avoid racking up credit card debt while making holiday purchases.

Now added savings may be coming their way if a proposed cap of debit card interchange fees passes.

On December 16, the Federal Reserve Board plans to discuss measures to limit interchange fees for merchants on all debit card transactions, Bloomberg reports. The agency will debate the proposed Durbin amendment to the Dodd-Frank Act, which plans to make costs for merchants “reasonable and proportional to the cost incurred by the issuer.”

The regulation, which does not affect credit card fees, may cut into the profits of issuers, but help reduce costs for retailers and consumers, the news source says.

The Dodd-Frank Act requires that the Federal Reserve write regulations on these payments by April 21, after which, an open public comment period will be enacted prior to the final vote, the news source says.

Bank of America and other lenders have battled against the caps, saying it could reduce their annual revenue by more than $2 billion a year.

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