Obama administration officials are warning consumers to avoid using their debit card or checking account to pay for things like gas and food.
The warning comes after the Federal Trade Commission filed a lawsuit against two credit card companies over fees that the companies charge for debit cards.FTC Chairman Jon Leibowitz told a Senate Banking Committee hearing on Thursday that consumers who do not have a debit card are better off using a credit card or cash instead.
Leibowitz said that while some consumers are choosing to avoid the debit card option, he has no problem with people using cash to pay.
“The reality is that credit card purchases are an important part of our economy, and we can do better,” he said.
“It’s not for everybody, and it’s not a replacement for cash,” Leibowitz added.
The FTC’s complaint alleges that CardHub, which offers credit cards and debit cards, and Mastercard, which provides checking accounts, use fees for debit card transactions that amount to an unfair profit-sharing scheme.
“As consumers, we can’t be complacent.
We need to be better,” said Carrie Bowerman, senior vice president of consumer affairs at Mastercard.
CardHub and MasterCard declined to comment.
The companies said in a statement that they are committed to ensuring our customers receive the best possible service.