This was as true in banking as it is in everything in life. There is no free lunch.
However, then came along lawmakers. Those people who think they can institute “fairness” and legislate morality.
These people felt they could pass laws that would limit banks and limit ill begotten profits all in the name of “the common man”.
Now we see the fruits of their labor.
Next month, laws new laws are expected to take effect. These laws, passed with the good intention of protecting the “little guy” are going to do the exact opposite.
See, in the past, banks would charge merchants who use their debit cards, and now, that ability has been curtailed:
Regulatory changes to be issued July 21 are expected to sharply limit the fees that banks can collect from merchants whenever customers pay with debit cards.
Hmm, so, banks are going to be limited on what they can charge people? I wonder what they are gonna do?
Well, they are gonna look for ways to make up for that lost revenue in other ways:
Bank of America is testing a new lineup of accounts that come with fees ranging from $6 to $25, depending on the level of service selected. Citi already revamped the terms on its checking accounts last year to include higher fees in many cases. Chase, PNC Bank and Wells Fargo ended or scaled back their debit rewards programs.
Gone are the days when banks would be able to allow market forces to dictate revenue and pass that revenue onto consumers. Now, with added “bank regulation”, customers, the regular guy, are going to get the short end of the stick.
How can you expect this to impact you?
Lemme count the ways:
You may have to do all your banking online, for example, rather than going into a branch. Or you may have to maintain a minimum balance or make a certain number of transactions every month.
Only 65 percent of checking accounts were free in 2010, down from 76 percent the previous year.
Much of that pullback was a response to another regulation last summer that prohibits banks from enrolling customers in overdraft programs without their consent. Overdraft fees, which are often $35 or more per violation, were an important revenue stream for banks.
The horror. Banks had to stop charging people who would demand and expect on the spot loans without qualifications!
Rewards programs for debit card purchases are a valued perk for many checking account customers, but they may soon only be available to the top customers, if at all.
In April, Wells Fargo stopped enrolling new customers in its debit rewards program, citing the regulatory changes and costs facing the industry.
Chase has already made the decision to end debit rewards for both new and existing customers.
At PNC Bank, only premium customers will continue to earn debit card rewards.
Banks used to give stuff away. Now they aren’t.
That’s GOOD legislation if I ever saw it.
Ahh, this is my favorite. Not only does a bank have to provide a whole machine that is close to you, but they have to provide said machine for free!
In some cases, banks may start imposing out-of-network fees on customers.
TD Bank, for example, says it will now impose a $2 fee when customers use another bank’s ATM. Other banks, such as Citi, have hiked their existing fees for using an out-of-network ATM.
Chase earlier this year even tested ATM fees of $4 and $5 for non-customers who used its ATMs in Texas and Illinois, but the bank dropped the tests a few months later without providing a reason. The fees in those states were lowered back to $3.
Hmmm, the sweet SWEET smell of regulation in late spring…..
Chase, for example, is testing a $3 monthly fee in northern Wisconsin for checking account customers who want a debit card.
Chase has also said there have been discussions about capping debit purchases at $50 or $100 per transaction.
In other cases, customers who aren’t able to maintain a minimum balance may be offered a prepaid card instead of a checking account. Prepaid cards, which are not subject to the new cap on merchant swipe fees, are not tied to checking accounts but work like debit cards and can be reloaded with cash.
People view regulation as damage. And they route around it.
Look, no one has the “Right” to a bank. No one “Deserves” a debit card or credit on demand. These are things that people are willing to provide for a fee. Pay the fee and experience the reward. Don’t….and don’t.
But when you pass laws that punish certain behavior, do NOT be surprised by other ugly behavior.