Photo: Flickr / MyTudut
Beyond poor people’s reliance on cash, there’s another thing keeping the US from embracing digital currency: swipe fees.”These swipe fees had been escalating for years as debit card use has become more common, though last year’s Dodd-Frank financial reform act capped these charges,” writes Jeremy Stahl at Slate.
Even as regulators crack down on swipe fees, banks are finding new ways to penalise plastic.
“To make up for lost revenue on debit card interchange fees, banks are starting to charge monthly fees if you use your debit card. That’s an example of a new fee popping up to replace the lost revenue,” says Your Money contributor Beverly Herzog.
And the fee cycle doesn’t end there. If monthly bank fees aren’t on the table—especially since most level-headed consumers won’t put up with them—then banks often look to jack up the interest rates on their cards. Currently, the average credit card clocks in an APR of 15 per cent, not exactly a rate to phone home about.
“To make up for the resulting shortfall in debit fees, banks could start including a surcharge for cash transactions,” says Stahl.