Who Should Pay for Debit Card Fees?

When you use a debit card to shop, should you pay the debit card fees or should it be left to the merchant? There is a provision in a Senate financial regulatory reform bill which would put limitations on the amount of debit card fees that merchants are required to pay. Lobbyists are defending the current system, and the average consumer doesn’t have a clue which team to root for.

Retailers asked for an amendment of interchange fee regulation. They said the increasing costs of fees associated with customer debit-card use makes it necessary. A supermarket trade group claims Visa’s debit card transaction fees for debit card use in grocery stores increased 30% in April.

Illinois Senator Richard Durbin created an amendment that would result in interchange fees having to be "reasonable and proportional to the actual cost incurred by the issuer or payment card network with respect to the transaction", and would be regulated by the Federal Reserve. The fate of this amendment lies with the House-Senate committee with the financial regulatory bill.

People who are not in support of Durbin’s amendment feel consumers would be hurt through this change. Banks would offer smaller rewards programs, or end up charging higher fees to consumers for using their debit cards.

Debit Card Fees Restricted By the Senate, MasterCard Vowing to Fight it

A bill approved by the U.S. Senate on May 13^th will allow merchants to set minimum and maximum transaction amounts for debit card purchases. Previously, you could buy anything with a debit card, regardless of the amount, and for store owners – if the purchase was small, like a pack of gum, it meant paying more in debit card service fees than the profits made on the purchase. With this bill, merchants will be able to set limits to ensure their profitability on debit card purchases.

MasterCard and Visa have been concerned over credit and debit card regulation for a long time. They are credit and debit card processing networks, and don’t receive all of the interchange fees directly, but their revenues do depend on how much people spend on their cards. If merchants restrict purchases, they fear they will experience large drops in revenues as people will be less likely to use their cards.

MasterCard is determined to fight this bill until it is finalized into law. While the bill isn’t restricting the amount Visa or MasterCard can charge in interchange fees to merchants on credit card purchases, they’re concerned that the regulation on debit transactions will open the door to more regulation in the future.

Reuters reports:

“MasterCard U.S President McWilton said in a speech earlier on Sunday that MasterCard was “very concerned” about the amendment and “working very hard to make sure” that it would not be attached to the final financial regulation bill.”

Consolidate Your Credit Card Debts into One

Consolidating your debts into one can be done in a number of ways. A few common options are a debt-consolidation loan, a personal loan, or a 0% credit card. With just one payment versus multiple ones, you no longer have the need to track countless payment dates or experience numerous late fees and finance charges that only increase your debt.

A debt-consolidation loan is strictly for compiling all your debts into one and establishing one affordable payment. The payment amount you establish will also depend on how quickly you wish to achieve financial freedom. One payment is much easier to manage than multiples with varying fees and charges, not to mention several different payment due dates.

Personal loans have multiple uses. There are some lenders, like E-Loan.com, who don't charge an application fee. Although your credit history is a determining factor, loan limits and interest rates vary between different lenders. For example, you may secure a $30,000 loan but with a 9% interest rate or maybe a $15,000 loan with only a 4% interest rate. Be sure to compare lenders in order to find the best provider.

O% credit cards may sound too good to be true but they are not a mirage. They are a current source of good opportunity offering the chance to consolidate all your debts into one with no interest rate for six to twelve months. The two currently available are Discover More and Escape both by Discover. For twelve months, you get 0% interest rate with the Discover More and there's no annual fee. With the Escape card, you get six months of 0% interest with only a 3% balance transfer fee and an annual fee $60.

Once you've consolidated your debts into one and are making one payment, it's time to establish a budget that's customized according to payday and payment due dates. Implementing this crucial money management tool will keep you from accumulating future debt because all your funds will be preallocated. With a budget, you stay in control of your money rather than wondering where it all went.

Credit Card Debt Default: How High Will It Go?

Credit card defaults are tied to the unemployment rate. It’s a simple fact that when people don’t have jobs, they cannot pay their credit card bills. But just how high will America’s credit card default rise?

As of June 2009, Moody’s Credit Card Index was reporting a credit card default rate of 10.76%. In that same month, the national unemployment rate was reported to be 9.5%.

Things are expected to get worse in 2010, with the jobless rate projected to climb to 10.5% and credit card defaults reaching a record 12-13%.

While credit card defaults are at record highs, delinquencies hit their lowest point in June of 2009: 5.81%. Experts believe that was a reflection of consumers using their income tax returns to catch up on their credit card payments, as well as a generally cautious attitude toward spending. Some analysts believe the federal stimulus funds also helped.

Restructure Your High Interest Debt With a 0% Rate Credit Card

Between ballooning interest rates and hidden charges, you've finally reached that pinnacle point with your finances when you're ready to pull your hair out and take the hedge trimmers to your credit cards. If the largest portion of your debt is on high interest rate credit cards, take heart in knowing there is a solution.

Transferring all your debt over to one card with a zero percent interest rate can be one debt-reducing solution; not to mention also a stress-reducer. There are currently two available through Discover: Discover More American Flag card offers 0% interest for twelve months with a 5% balance transfer fee; the Escape card offers 0% interest for six months with a 3% balance transfer fee.

Discover More Card-0% interest for twelve months with 5% balance transfer fee.

After the first year of 0% Annual Percentage Rate, the standard rate of 10.99% - 18.99% will apply. Standard rates depend on your credit history. There are multiple designs to choose from and there are over 50 million Discover Card users. Also, there is no annual fee with the Discover More Card.

Escape Card-0% interest for six months with 3% balance transfer fee.

After the initial six months, the standard APR rate of 11.99-18.99% will apply, according to your credit rating. Although there is only a 3% balance transfer fee during the first six months, there is a $60 annual fee in addition to other fees and charges.

Neither of these options will make your debt disappear but can certainly reduce your stress level. Knowing your monthly payment is paying completely for principal and not interest, is a priceless peace of mind. Which card you choose depends on how soon you can realistically pay off your debt; six months or twelve. For your convenience, you can apply for either the Discover More or Escape Card online or by phone.

Credit Card Debts Going Down

There are signs that consumers are bringing credit card debt under control and are beginning to make strides to pay it off along with other debts like automobile loans.

Moody's Investor's Service reports that the charge-off rate by banks for bad consumer debts decreased from 10.76 percent in June 2009 to 10.52 percent in July.

Also, delinquencies that had been on a steady increase have also begun to decline. The Federal Reserve has issued statements that show that there is a positive move by consumers to paying down their debts as well.

Retailers are hoping that this bodes well for the holiday shopping season. It appears that more families have discovered ways to manage their debt and make strides to pay it down. Other studies are validating this trend. Consumers are also increasing their savings rates at levels not seen in years.

With unemployment and underemployment still major issues, the positive effects will probably not be wide-reaching, but it is better than the opposite.

The best way to view this information is to realize that families are in a better position to make a comeback when things do improve.

This is not good news, however, for credit card companies who are beginning to feel the pinch of fewer and fewer people using their credit cards for purchases and instead paying with cash via debit cards or using tactics like layaways at retailers to fund their purchases.

The door to economic recovery is opened but just slightly for the moment. The recovery is fragile and might still be a ways away before it grows stronger.

TransUnion Releases Snapshot of National Credit Card Debt

Credit agency TransUnion released some discouraging figures on Wednesday, proving that consumer debt and delinquency are still on the rise. That’s not news to anyone who’s been reading the headlines lately, but TransUnion also released some interesting facts about which states are the most delinquent, and which are the most - and least - indebted.

According to TransUnion Trend Data, a sampling of 27 million consumer records throughout the nation, Nevada residents are the most delinquent in all the fifty states, followed by Florida. The relatively high rate of credit card delinquency in those states (1.79 and 1.45 percent, respectively) is tied to the housing and mortgage crisis. Both states suffered from the fallout. On the other end of the spectrum, consumers from Vermont and North Dakota were the least likely to be delinquent on their credit card payments.

Which state’s citizens are the most indebted? Alaska, with an average credit card debt load of $2,486. Tennessee and Alabama round out the top three. People from Iowa and the Dakotas carried the least amount of credit card debt.

As a country, we’re not faring so well. The total average credit card debt is up 1.4 percent from the previous quarter, and 7.7 percent from a year ago. Ezra Becker, principal consultant in TransUnion’s financial services group, finds it remarkable that the demand for credit cards is higher than the available supply. Experts blame the recession and the fact that many people are suddenly finding themselves unemployed and with fewer resources available. In response, they turn to credit cards to make ends meet.

The figures from this study pertain to the third quarter of 2008, which ended September 30th.

Shopping Online? Debit and Credit Work Differently.

Will you be shopping online this holiday season? How do you plan to pay for your purchases? Many shoppers don’t think it matters, but credit cards and debit cards have very different levels of buyer protection.

When you pay for online purchases with credit cards, you maintain your rights to dispute charges and refuse making payments while a charge is being investigated. Additionally, by reporting suspicious charges to your card issuer, you can only be held accountable for the first $50 in unauthorized charges made to your card.

Debit cards give you a bit of protection, but with limits. For example, you could be held accountable for the full amount of unauthorized charges made to your debit card unless you report the charges to your bank within 48 hours. Also, the money will be removed from your bank account, leaving you strapped for cash in the middle of the holiday season.

Major online retailers and auction sites like Amazon and Ebay are frequent targets for hackers. If you’d rather not enter your card information directly on a web site, consider using a payment processor like Google Checkout, or a third-party service like Bill Me Later. (Just be sure to pay off your deferred balance on time, or Bill Me Later will tack on some hefty interest charges.)