By Jim Donovan

PHILADELPHIA (CBS) — Every time you use your debit card to buy something, the retailer is charged a fee. It might be pennies on a cup of coffee, but it adds up to billions of dollars for banks. Now, some changes to those fees are coming that could have you paying more in the long run.

A law scheduled to go into effect next month will change the formula used to determine debit card fees. Supposedly, the change is being made to hold down costs for consumers, but some consumer advocates aren’t so sure it will work out that way.

A tank of gas, a cup of coffee, a bag of groceries. We are all accustomed to paying with plastic, but these days, the debit card is king. And when it comes to payment, not all transactions are created equal for retailers.

“You have this three tiered system. Cash is the best for the retailer. Debit would be next. Credit would be worst,” says Market Watch columnist Chuck Jaffe.

When you use a credit card, the retailer is charged 2 to 3 percent of the purchase price by the bank. Right now, the rate for debit cards is 1 to 2 percent, which averages 44 cents per transaction. Under the new regulations, that would change to a flat fee, likely 12 cents.

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The banking industry collects about $16 billion in debit fees annually. The question is where they are going to make up the money lost due to the fee change. Jaffe feels, “They are going to wind up taking away a number of other things. You have already seen some of it, free checking–forget about it. Just watch those rewards evaporate, watch things along those lines just change completely.”

The new debit card fee rules are scheduled to go into effect on July 21st, but the Federal Reserve could still change the exact amount the fees are changed. In the meantime, financial experts say the best defense is to be aware of the terms of your card so that you know the rules if something does change.

Reported by Jim Donovan, CBS3

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