Banks are blaming retailers for their new debit card fees and say that the Durbin Amendment will force consumers to credit cards.
Denny Hudson, the chairman and chief executive of Seacoast National Bank, said that his smaller bank will benefit from the Durbin Amendment because it only applies to larger banks that now have to raise and add new fees to recoup the interchange revenue that was capped, PalmBeachPost.com reports.
While Hudson said he sees opportunity for smaller banks with the Durbin Amendment, he said that the large retailers are the ones who lobbied hard for the legislation and will stand to benefit the most.
“The insane thing about it is that the reduction in fees imposed by the Durbin Amendment didn’t create any benefit for the consumer,” Hudson said, according to PalmBeachPost.com. “It created a benefit for Wal-Mart, Target and other merchants. The perverse result of this is that customers at Bank of America who don’t want to pay the five dollar a month fee will have to go back to using their credit card.”
Bank of America, along with other major U.S. banks, blamed the Durbin Amendment for its new fees. SNL Financial's Nancy Bush, however, said that the banks have done a weak job of explaining themselves.
“The banks have done a horrible job of warning customers that this was coming, and explaining why it was coming,” Bush said, PalmBeachPost.com reports. “Consumers don’t know from Dodd-Frank. They don’t know from
the Durbin Amendment.”
Bank of America debit card holders will now be charged for using their debit cards a move that will likely shift them towards credit, according to financial experts.
“There’s a lot of stigma around credit card use,” Chris Hernandez, a Bank of America customer, said, according to PalmBeachPost.com. “I hear a lot of horror stories about people getting into debt.”