Most people use credit and debit cards far more than cash.  When a merchant swipes our card and process our transaction, their are substantial costs.  Banks that process these charges take 1–2 percent on debit card purchases and 2–3 percent when a consumer uses a credit card.  Last year banks raked in $48 billion dollars in so-called ‘swipe fees.’  This is all about to change on debit card transactions (or maybe not).

The History Behind The Changes

The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into law in July of 2010 by President Obama.  The law applies to card issuers with over $10 billion in assets, and issuers would have to charge debit card swipe fees that are "reasonable and proportional to the actual cost" of processing the transaction.  The limit would be 12 cents per transaction rather than the current 1–2 percent banks are charging now.

Not So Fast

As I write this article I am seeing breaking news stories about last minute attempts by lobbyists to push out the enactment of this law for two years.  No surprise, as the bank and credit card industry is the most powerful of all lobbying groups in Washington.

Why This Is Likely To Cause Banks To Raise Other Fees?

Not that banks need an official excuse to start raising fees, but this one will do just fine.  Experts expect bank fees (already on the rise) to continue to increase on everything from checking accounts, ATM fees, and virtually every sort of service fee they can concoct.  It is estimated that the Credit Card Reform Act is costing banks $5 billion dollars annually by not allowing them to automatically enroll customers in debit card overdraft programs.

How To Drop Out Of The Banking System

In my own family, we do not use paper checks.  We pay all of our bills by debit card or money order.  We simply grew tired of dealing with the whole process and expense of writing physical checks.  On occasion, if needed, we will buy a money order to pay a bill if it can not be paid with a debit card.

Some people have decided to drop out of the banking system completely by using a pre-paid debit card.  This is a link to a card that we recommend and that our site is an affiliate of.  This debit card allows you to receive your paycheck through automatic deposit directly to your card.  For many people, this may completely eliminate the need for a checking account at a local bank.  With service like Pay Pal and the Wal-Mart MoneyCard, bank checking accounts may soon be going the way of the 8-track tape.

The Narrow One Way Street Of Dealing With Banks

Banks are currently offering virtually no interest on savings accounts or CD’s.  It seems that money is flowing in one direction; into bank coffers and not to the bank customer.  I was just reviewing the fees from the Bank Of America website.  There are monthly fees simply to have a savings account (if you don’t keep at least $2,500 on deposit).  There are fees if you withdraw money from your savings account more than three times during the month, and on and on …  I have personally reached the point where I am convinced that banks have become the most hideous part of the financial landscape of America today.  Let’s not forget that Americans bailed out the entire banking industry only two years ago.  Not withstanding our generosity, the thank you we receive is just more and more fees.

Why I Don't Have Any Sympathy For Banks

How can banks claim to be struggling when they pay less than one percent interest on savings and charge 18% rates on credit cards, $2 -$3 on ATM transactions, 1 to 3% on every credit/debit card transaction, not to mention the license they have to print money?  It is called fractional reserve banking and most Americans have no idea that it is nothing more than a legal Ponzi scheme allowing banks to loan out 10 times more than they actually have on deposit.  Not that it directly applies to the topic of this blog post, but I very much enjoyed the story this week of a couple that took great lengths recently to collect money owed to them from Bank Of America.

If this swipe fee reform goes through, hold on to your wallet as banks begin to look for ways to replace this lost income.

Helping you make the most of God’s money!

James L. Paris
Editor-In-Chief ChristianMoney.com 
Follow Me on Twitter Twitter.com/jameslparis
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