Home > 2011 > Credit Cards > Despite Cap, Banks Still Make Money From Debit Cards

Despite Cap, Banks Still Make Money From Debit Cards

Advertiser Disclosure Comments 0 Comments

Big banks have been doing a lot of complaining lately about new federal rules limiting how much they can charge retailers every time a consumer buys something with a credit card. The rules, imposed by the Federal Reserve, cut debit fees in half to about 22 cents per swipe.

In response, the banks have been throwing a major tizzy fit. They spent over $30 million a month on lobbying, much of it to overturn the debit rules, as we reported. To make up for revenue lost to the cap, Bank of America tried charging its customers $5 a month for debit card purchases. The move was so unpopular that it attracted scorn from President Obama, and helped catalyze Bank Transfer Day on Nov. 5, when at least tens of thousands of people removed their money from large banks.

[Article: As Bank Transfer Day Approaches, Credit Unions Winning Big]

In the midst of all this controversy comes a little piece of irony: Banks still make money from debit cards, even after the new fee cap. “Even with reduced revenues, debit still drives profits,” according to a paraphrasing comments by Scott Qualls, a vice president with BB&T Corp., a bank holding company, by American Banker magazine.

Qualls spoke last week at American Banker’s ATM, Debit & Prepaid Forum in Las Vegas. The rest of the article focused on ways bankers can keep debit profitable, including charging fees for debit accounts that also offer rewards programs.

[Featured Product: Need a loan?]

Image: chensformers, via Flickr.com

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.