Debit Legislation Could Decrease Consumer Debt

The Federal Reserve Board is scheduled to meet on December 16 to discuss a proposed cap on debit card related fees, which could save merchants and consumers money.

Due to a provision in the recently passed Dodd-Frank Act, lawmakers are required to write new debit card regulations by April 21. After the meeting, the proposals will be open for public comment for a brief period, before proceeding to a final vote.

The proposal would reduce bank revenue on these transactions, taking the burden off of merchants who could save more money, lawmakers say. However, many banks could see profits drop. Bank of America says it could lose as much as $2.3 billion annually due to the bill's provisions, the news source says.

While this move could save merchants money, it may not be good for consumers as banks would likely increase other fees in order to recoup the revenue. Additionally, merchants may not be inclined to pass on any savings to consumers in the form of lower prices.

This could in turn hurt the millions of Americans who are currently battling debt, and hoping to reduce their monthly payments.