Frequently Asked Questions: Our Debit Transaction Fee
Beginning Sept. 1, 2013, anytime you use your PIN (personal identification number) rather than your signature when making a purchase with your debit card, we will assess a 25-cent fee. Purchases for which you sign will remain free.
We’ve endeavored to anticipate and answer some questions about this new fee.
How do I avoid this new fee?
Simply choose to run your debit card as “credit” and sign for the purchase. For smaller purchases, often $25 or less, you may not even have to sign. In addition, most restaurants will run your debit card as a credit by default, so you shouldn’t pay a fee for those transactions. Finally, because most online purchases run a debit card as a credit, the fee typically will not apply.
An easy way to remember this change: Sign, you save. Pin, you pay.
Where does the money come from if I’m treating my debit card like a credit card?
Regardless of whether a transaction is run as credit or debit, the money comes directly from your checking account. There may be a delay of one to two business days before the credit transaction shows up in online banking, but this is still faster than waiting for a credit card statement and paying a credit card bill at the end of the month.
When you run a debit card transaction as a credit, it is simply processed through a different network. Instead of a PIN debit network, it goes through the Visa network (since our cards carry a Visa logo). Visa's interchange fees determine the charge to us for such a transaction. (Read below to learn more about interchange fees.)
I have to use my PIN at the ATM. Will I be charged a fee there?
This fee will not apply to ATM transactions.
My favorite store automatically runs my debit card as a debit. How can I run it as a credit?
Usually, it’s a matter of pressing the red or green button on the card machine, depending on the instructions the machine gives. Some retailers may handle this differently; ask the cashier if you’re not sure.
If your favorite retailer does not accept credit cards (one example is Aldi) and can run debit card transactions only as “debit,” consider paying with cash or a check when you shop there if you wish to avoid the fee.
If I keep using my PIN and get charged the fee, will I see a bunch of 25-cent charges on my account?
No. You will see a daily cumulative charge at the end of each business day, should you continue to make debit card purchases using your PIN. For example, if you enter your PIN for five different purchases, a charge of $1.25 (25 cents times five) will appear on your account, noted as “PIN Convenience Fee.”
Why are you doing this?
Simply put, signature-based transactions have a more positive financial impact on your credit union.
When you use a debit card at a store, the merchant must pay an interchange fee, which goes to the card issuer to cover the risk of fraud, transactional costs and other overhead. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2011, which was aimed at enacting broad financial reforms, lowered the interchange fees a merchant pays, meaning our interchange income has declined while debit card transactions rise in number and dollar volume. In short, offering the convenience of debit cards to our customers has become more expensive for us.
In order to offset this increased expense while preserving the lifeline that we know your debit card is to you, we felt offering a “free way/fee way” option was preferable to eliminating free checking or other conveniences or charging a fee that applies to all members.
Something else to consider: Crooks love stealing your debit card data and your PIN because that complete package of information allows them to make counterfeit debit cards in order to withdraw cash from your account at ATMs. They can accomplish this at gas stations in particular by placing a credit card skimmer where you swipe your card to pay for gas at the pump. If you must use a debit card at the pump, it's much safer to run your card as "credit" (usually available as an option on the screen) than it is to type in your PIN.
What benefits could this possibly have for me?
For one thing, the signature option – the “free way” – offers more simplicity. Some members find it easier to sign for a purchase rather than try to remember and use their PIN, especially when we need to remember so many passwords and other bits of information on a daily basis.
For another thing, signing for purchases rather than entering a PIN gives you the chance to earn rewards points. These points can be redeemed for travel, jewelry, electronics, merchant gift cards and other merchandise. Not every financial institution makes this perk available for debit cardholders! Visit www.CURewards.com
to find out more about this program and the rewards you can earn through it.
Which action is more popular with consumers: signing for their purchases or entering their PIN?
According to a report that the Federal Reserve Board issued in March 2013 on debit transaction trends in 2011, 63% of debit transactions were signature-based and 37% were PIN-based.
Another fee? You guys are turning into a bank!
We still offer fewer and lower fees than banks, along with better dividends and lower interest rates. We also continue to offer totally free checking, unlike many banks, and valuable products like our interest-refund auto loans. Without a way to offset lost income from the lowered interchange fees we mentioned above, we would have to eliminate some or all of these benefits – which really would make us more like a bank.
In addition, we remain a not-for-profit institution, run by volunteers, owned by our members, and dedicated to sharing our financial successes with you rather than with elite shareholders.