Posted on 10/06/2011 5:00:06 PM PDT by hga1234
Dick Durbin's Amendment stipulates new rules that will lead to lower fees for merchants when you swipe a debit card in their stores. Merchants currently pay around 1% of every debit card transaction to the credit card cartel. The lower fees to merchants, in theory, could lower prices in stores. We don't think consumers will benefit.
The Australian government capped credit and debit interchange in 2003, which has resulted in some pretty pathetic credit card offers compared to what we have stateside. The average annual fee in Australia is $132, compared with $19 in the US. Rewards programs are also far inferior, as you might expect, and APRs average a full 4% higher than in the US.
While it’s impossible to quantify how interchange regulation is re-distributing profits, it doesn’t seem to us like this benefits the consumer at all. Merchants know what price you’re willing to pay for their goods, so they have no incentive to lower prices, but will likely use this regulation to justify raising prices on card users.
Even if merchants are honest and decide to lower prices for cash payers by 2%, the credit card user is still getting double-taxed – once by the merchant in terms of a “credit card surcharge”, and once by the credit card company in terms of higher annual fees, higher interest rates, and lower rewards.
(Excerpt) Read more at nerdwallet.com ...
Not for me.
What’s a credit card?
That thing you use if you buy something online, unless you use PayPal.
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