Another president of a financial institution that offers a reward checking account has written about the problems of the Durbin Amendment and how it could force them to lower their reward checking rate. The Durbin Amendment is part of last year's Financial Reform Act. It requires the Federal Reserve to set limits to debit card interchange fees.
In January, the president of Royal Banks of Missouri warned customers that the new regulation would likely result in lower debit card fee income which would impact reward checking.
The latest warning was published by the president of Lake Michigan Credit Union. This credit union is one of the few institutions that still offer 4.00% APY on its reward checking account (it's only for balances up to $15K). The credit union president included in the warning a call to action for members to contact their representatives. There is currently legislation in both the Senate and the House to delay the implementation of the Durbin Amendment. Here's an excerpt of the open letter from the credit union president:
Interchange income also plays a big part in Lake Michigan Credit Union's ability to offer you free checking and our high interest bearing Max Checking account. The Durbin Amendment would drastically lower our interchange revenue and result in Lake Michigan Credit Union no longer being able to offer you free checking or pay the great rate of 4% APY* on Max Checking.
The Durbin Amendment exempted financial institutions with assets under $10 billion from the debit interchange fee cap. Since there are only three credit unions with over $10 billion in assets, one might think that most credit unions wouldn't be worried. However, just like Lake Michigan, almost all credit unions are worried that they will not be protected.
Lake Michigan Credit Union president's letter pointed members to the website sponsored by the Michigan Credit Union League, SaveMyFreeChecking.com. This website is designed primarily for Michigan residents. For non-Michigan residents, it points to the Credit Union National Association's Grassroots Action Center which is designed to make it easy for people to contact their representatives.