When does $15 of food cost $20? Next year.

Sometime next year banks will charge you a monthly fee of approximately $5 to use your debit card. To be fair, you will be charged that fee only if you use your debt card. And who do think we can thank for this auspicious additional hole in our wallet? Congress. Thanks to the efforts of the federal reserve and your congress, you will pay the price for a congress that does not understand.


Typically, today if you use your debit card, the bank charges the merchant, not you, $0.44 to use your debit card for  a single transaction. There is no monthly fee. Congress thought that $0.44 was too much so they have regulated the banks so they can only charge the merchant $0.24 for each transaction. It is called a cap. Of course this cap will save the merchants $millions. But the banks in response to this innovative congressional regulation have indicated they will start charging the consumer a monthly use fee of $5.

Now let me put this in perspective. You will go to the store next January and buy $15 of food with your debit card. This year the bank charges $0.44 on this transaction from the merchant. Next year, the bank will take $.24 from the merchant, but will charge you $5 that month for using your debt card. In other words, the bank has gone from making $.44 for a single transaction to $5.24 or the same transaction, 12 times more than they made before, and they say Banks do not like regulations.

Isn't congress wonderful? The feds are greasing the path to working for the banks come retirement time. Why else would they sock it to consumers like a professional boxer fighting a new amateur? The fed has spent numerous hours negotiating with the banks, taking the hard negotiating line in the name of their constituents, and they have won a hard-fought battle and compelled the banks to charge the merchants less. It was a resounding victory for someone, but not the American citizen.

The banks responded to the new restriction with a simple email memo saying next year, we will charge consumers $5 a month to use their debit card. The banks could care less about giving up the $0.20 per transaction. To be fair again, for the second time in this blog, the $5 monthly fee allows you to use your debit card many times, but use it only once and you pay $20 for that $15 bag of groceries.

The banks understand the many ways you can skin a cat.