Blogging with the CEO

Many of our members may not know about a federal law that controls debit card interchange fee may go into effect this summer. As many poorly constructed laws go, there are serious unintended consequences to the members of our community that will increase the costs of maintaining a checking account. What is debit-card interchange fees? Each time a debit card is used, the merchant pays a small fee, called interchange, to the credit union or bank that issued the debit card. Use of the debit card is safe and convenient for both the consumer and the merchant, eliminating the need for cash handling. The issuer (bank or credit union) earns the fee, which is used to offset the costs of offering the debit card. The merchant passes fraud and security risks to the card issuer, too.
The fee is small. With many cards issued by community banks and credit unions, like NorthPark Community Credit Union, the fees accumulate to become an important source of income to the financial institution. Credit unions and banks use the excess income to offer free checking. Many consumers risk being pushed out of the banking system altogether if interchange income is capped at significantly lower levels, forcing credit unions and banks to do all or some of the following: eliminate free checking, charge annual or monthly fees to possess a debit card, lower savings rates, raise loan rates or raise other fees. Many of the services enjoyed by credit union members may cost significantly more, if this law is allowed to take effect.
As it relates to interchange fees, The Dodd-Frank Act (with the Durbin Amendment) only affects banks and credit unions over $10 Billion. So why am I alarmed? The Federal Reserve states it cannot regulate a two-tier system (for those institutions over $10 Billion and those under $10 Billion), and may not meet the deadline to do so. Consumers will suffer while the big box merchant retailers enjoy even more profits! One national chain has stated their company will earn $28 million more net income a year...and did not plan to pass that on to the consumers!
The entire credit union movement along with the community banking industry is working hard to defeat this portion of the Dodd-Frank Act, but it may not be enough. What can you do to protect yourself? Call or write your U.S. Senator and Representative and tell them to co-sponsor Senate Bill S.575 or House Bill H.R. 1081. Want to learn more? Go to www.savemyfreechecking.com or call NorthPark CCU for the addresses of your local Congressman and Senator.
Families paying higher costs for food and fuel do not need one more expense. Thank you for your support.
Sincerely,
Dan Robbins, President/CEO
NorthPark Community Credit Union