Debit cards were supposed to be toast. The industry started writing their obituary when financial reform targeted overdraft fees and interchange or “swipe” fees, which had made debit cards extremely lucrative for banks. So why is it that banks are now pushing debit cards like never before?
A couple years ago, the banking industry warned federal regulators that reform efforts could lead to both an increase in fees and a decrease in debit card usage. “Banks and credit unions could charge for various debit cardâ?related products and services that are now offered free of charge, such as free debit cards and free debit card transactions,” a consortium of financial industry executives wrote in a 2011 letter to the Federal Reserve arguing against reform. “Issuers could also be forced to discourage the use of debit cards for certain transactions … there could also be a reduction or termination of various products and services associated with debit card programs.”
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