I’m glad to see Carrie wrote about the pending changes to debit programs as a result of the Durbin Amendment in last year’s Dodd-Frank bill – because I was about to put up something similar! Certainly, Bank of America’s new debit fees are dominating the news, but that’s not the only effect that this has had on the banking sector.
As Rita Arens over at BlogHer noted in June (reposted again yesterday): “With banks holding assets of less than $10 billion exempted from the swipe fee reform, we're talking about the big dogs here. My cynical side knows they're not going to take a huge reduction like that in stride.” And… she was right.
I got a letter in the mail yesterday from Citibank letting me know that my mileage rewards program is going to be discontinued in two months. Without a doubt, my program isn’t the only one that’s going to be changing – with banks making less revenue as a result of this decision, they’re going to have to scale back what they offer customers in order to maintain the same profit level. These programs aren’t free – banks offer them because they assume that it’s worth the cost to differentiate themselves from the competition. Until recently, that is, when they’ve determined that the costs outweigh the benefits. Hence, no more AA miles for me on my debit card.
As we stated months ago, it’s absolutely preposterous that a group of bureaucrats would presume to dictate how much one set of businesses should charge another for a service. That’s called price fixing, and it didn’t work in the 70s – so why would it work now? We, as consumers, are paying for this arrogance by having OUR choices limited. Thanks a lot, Congress.