Friday, September 30, 2011

Quotation Of The Day: Debit Card Edition

I haven't written a check in the past 10 years.  I use my debit card and pay bills on line.  I appreciate this David Frum blast at Bank of America's decision to start charging people to own debit cards.
Bank of America attributes the new monthly charge to genuine cost issues. Maybe. But it’s always worth remembering that banks detest debit cards on principle, and for exactly the reason that consumers like them. Debit cards prevent consumers from accumulating excess debt. They compete with credit cards, which encourage debt. And despite today’s ultra-low-interest rate environment, credit card interest rates have reached an all-time peak of an average almost 15% APR.

So yes it’s theoretically possible that banks are on-forwarding genuine cost increases. But it’s also possible that banks do their accounting in such a way as to make the strongest possible case against the debit cards they hate, so as to drive consumers back toward the dangerous device that makes them so much money: credit.

Happily, there are other banks in the world than Bank of America. (I’m a customer, but I’ll be rethinking.)

Whatever your personal financial decisions, one lesson should be taken by all from the financial crisis of 2008-2009: more skepticism is due about everything the big US banks say about what they do and why they do it.
I suppose my full throated support of the last paragraph means I'm some sort of anti-capitalist conspiracy theorist.  If my bank starts charging for the debit card, I too will begin looking for a bank that doesn't.

1 comment:

caheidelberger said...

We could all start carrying cash again... but then I'll bet the banks will impose a currency handling fee.