This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Durbin Amendment Gave More of Us Free Checking

NEW YORK ( TheStreet) -- There are varying schools of thought on the effectiveness of the so-called Durbin Amendment, a key provision in the 2010 Dodd-Frank financial reform bill.

The amendment reduced the amount of money banks can charge merchants for debit card purchases to an estimated 21 cents per transaction from 44.

Proponents say the amendment has kept a lid on consumer debit fees, while critics say those savings have not been passed along to debit card customers.

But there is one area where the legislation seems clearly to be helping consumers: more free checking accounts.

The Kansas City Federal Reserve has the evidence. It says the number of free checking accounts in the U.S. grew from 19.4% in 2011 (the year the Durbin rule was enacted) to 21.6% last year. "For an average consumer, free checking became more available after interchange fee regulation," the Kansas City Fed says in the study.

Customers at smaller banks, which were exempt from the Durbin Amendment, didn't see charges on checking accounts, while financial institutions with more than $10 billion in assets sought ways to compensate for revenues lost from limits on debit card fees.

"Thus, consumers' net increase in access to free checking stemmed mainly from the greater availability of free checking at exempt banks," the Federal Reserve report says. "Elimination of free checking accounts at larger, regulated banks was more than offset by an increase in free checking accounts at smaller, exempt banks."

Stiffer competition among banks has also helped keep checking account fees down, according to the Kansas City Fed.

"This [study] finds evidence that access to free checking has expanded most in cities and regions where banks are engaged in vigorous competition: banks in such markets may offer free checking to attract customers from other banks or to ensure retention of their own established customers," the report adds.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%
YHOO $44.52 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs