Interchange Cap Likely Leading To More Unbanked Americans
The number of Americans who have bank accounts is likely to drop in the coming months as financial institutions seek to make up the costs of additional regulation with greater fees.
Media outlets have reported that banks with more than $10 billion in assets have been setting minimum balance requirements in order to avoid paying fees for checking services and that some have begun charging fees for debit cards and debit card use.
All financial institutions have faced increased regulations, but financial institutions with more than $10 billion in assets also face a cap on their debit card interchange which has been proposed as low as 12 cents per transaction.
Tim Chen, CEO of NerdWallet, a web site which helps consumers compare credit and debit cards, pointed out that this will both hit lower income consumers and those who have moved away from using credit cards the hardest.
"So all those consumers who cut up their credit cards during the crisis, and vowed to stick with debit, will now have to face paying for their discipline with absurd fees," Chen wrote in an opinion piece in the Huffington Post.
"The biggest problem with these changes is that they fly right in the face of low-income Americans," Chen continued. "These are the people who have typically been forced to rely on prohibitively expensive alternative financial services, like prepaid debit cards, payday loans, and check cashing services. Now, they will no longer have any cheaper alternatives in the traditional banking industry."