While low income families have turned to prepaid credit cards to get through a down economy, the Durbin Amendment may impact those cards and add new fees and charges.
As a result of the Durbin Amendments' slashing of debit card transaction fees, banks may find themselves forced to look elsewhere to recoup lost debit card fees, the Associated Press reports.
Approximately 70 percent of prepaid credit card users earn less than $45,000 a year. Prepaid credit card users are already saddled with feeds, straining the financial capacity of many consumers. The higher rates that could follow as a result of the Durbin Amendment could stretch the budgets of these users even more.
An exemption to protect low income users from fee hikes is set forth in the rule for prepaid credit card users, however, but it may require as long as one year to go into effect, the Associated Press reports.
Some bank officials have also warned that merchants will discriminate against cards from exempt issuers.
The new law was approved 4-1 by the Federal Reserve on Thursday. The dissenting vote was cast by Elizabeth Duke who last year spoke to the Federal Reserve Bank of Philadelphia about increased protection for prepaid card users.