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Debit Fees May Not Be Hurting Big Banks

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While consumers are feeling the pain in their credit card bills, big banks may not be struggling as much as previously reported. As a result of the increased debt, many Americans are carrying, consumers across the country have turned to cash, prepaid cards and debit options to stay on budget.

In addition, recent reports indicate the most common plastic option - debit cards - may soon be more inexpensive due to recent interchange fee caps instated by the Federal Reserve.

However, in recent months, banks have been lobbying to overturn this regulation, as they argue it could affect their revenue streams. Some of the ways banks will likely increase their revenue is by putting the strain on low-income consumers, Reuters reports.

Some experts say as many as 5 percent of Americans may no longer be able to afford basic banking services such as checking accounts due to these changes, the news source says.

"Banks are highly, highly innovative when it comes to developing new revenue streams," Philip Philliou, a former executive at MasterCard and American Express, told Reuters. "When one door closes, two others open - I'm sure that's going to be the same for debit."

Most major financial institutions have already begun imposing annual fees and monthly minimum requirements on consumers, or have proposed plans to do so, as means to counter the legislation. 

Timely articles written by the Editors at DRC