By CANDICE CHOI

Americans prefer using their debit cards at the register. But a small fee could change that.

A new Associated Press-GfK poll finds that about two-thirds of consumers use debit cards more frequently than credit cards. But when debit card holders were asked how they would react if they were charged a $3 monthly fee for their debit card, 61 percent say they’d find another way to pay.

If the fee was $5, 66 percent would do the same. If the fee was $7, the figure rises to 81 percent.

The findings come at a time when consumers are seeing unwelcome changes to their debit cards and the checking accounts to which they’re linked. Although banks haven’t started imposing monthly fees for debit cards, there are signs higher costs could be on the way.

Starting in October, a new cap will sharply limit the revenue banks can collect from merchants whenever customers swipe their debit cards. That revenue has been a critical income source for banks; merchants paid issuers $19.7 billion for debit transactions in 2009, according to the Nilson Report, which tracks the payments industry.

Consumers are already seeing the fallout. Chase, PNC Bank and Wells Fargo ended or scaled back their debit rewards programs citing the new regulation. The availability of free checking accounts also declined last year for the first time since 2003.

And more changes could be in store.

Chase, for example, is testing a $3 monthly fee for debit cards on new accounts in northern Wisconsin. In Atlanta, it’s testing a $15 monthly fee on basic checking accounts.

Among the AP-GfK poll respondents who say they would leave their debit cards in their wallets in the face of such fees, more say they’d pay with cash, 53 percent, or check, 42 percent, rather than another form of plastic.

“Cash or checks — they’re not very expensive,” said Aaron Alto, a 44-year-old resident of Grand Rapids, Minn. Alto says he’d be annoyed enough to look for an alternative to his debit card if the fees approached $10.

Debit card fees would cause 22 percent to switch to credit cards, and 12 percent say they would switch to a prepaid spending card.

For now, the notable preference for debit could be linked to a negative sentiment about credit cards; nearly half of respondents to the AP-GfK poll say the interest rates they’re charged are unfair.

That may be because 30 percent had their interest rates hiked in the past two years. That’s more than twice the number who say their rates were lowered.

Forty-two percent of respondents also say the fees and penalties on their cards are unfair; 37 percent say card issuers recently raised those potential charges.

The higher rates and fees may have surprised consumers in light of the new regulations that were intended to protect cardholders and put an end to questionable billing practices.

Under the rules that went into effect last February, cardholders are now entitled to 45 days notice before their rates are hiked. Card issuers are also prohibited from raising rates on existing balances, a once-common practice that consumer advocates had long decried.

Additionally, the one-time penalty fees for late payments are capped at $25 per violation. But there’s no limit on how high banks can hike interest rates on purchases or the default interest rates that kick in when customers are late on payments.

Earl Law, a 61-year-old resident of Buffalo, N.Y., said the penalty rate on a few of his cards is 30 percent.

“It’s absurd. It’s usurious,” he said. “If you’re struggling with debt, that’s the last thing you need. You’re asking people to fail.”

Despite the widespread discontent with interest rates, the regulations are having a clear, positive impact in one area: monthly statements. Nearly half of respondents say they’re now easier to understand.

Part of the reason is that the new law requires credit card issuers to spell out the cost of carrying a balance. For example, statements now include a chart that shows how long it would take to pay off a balance if only minimum payments were made. The chart also includes the total amount the cardholder would pay over that time, including interest charges.

The increased transparency might be one reason why the majority of consumers — 78 percent — say they plan to stick with their cards, despite their grumblings about high rates and fees.

It could also be that consumers have grown numb to unpleasant changes. In the months leading up to the passage of the new regulations, many cardholders saw their interest rates hiked, credit limits slashed and inactive accounts shut down.

The poll was conducted June 16-20 by GfK Roper Public Affairs and Corporate Communications. It involved landline and cell phone interviews with 1,001 adults nationwide, including 715 who have credit cards and 706 debit card holders. Results from the full sample have a margin of sampling error of plus or minus 4.1 percentage points; it is 4.8 points for those with credit or debit cards.

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Associated Press Polling Director Trevor Tompson, Deputy Polling Director Jennifer Agiesta and AP News Survey Specialist Dennis Junius contributed to this report.

Online:

Poll results: http://www.ap-gfkpoll.com

 

 

How the poll was conducted

By The Associated Press

The Associated Press-GfK Poll on changes to credit card laws was conducted by GfK Roper Public Affairs & Corporate Communications from June 16-20. It is based on landline and cellphone interviews with a nationally representative random sample of 1,001 adults. Interviews were conducted with 700 respondents on landline telephones and 301 on cellphones. The sample included 715 credit card holders and 706 debit card holders.

Digits in the phone numbers dialed were generated randomly to reach households with unlisted and listed landline and cellphone numbers.

Interviews were conducted in both English and Spanish.

As is done routinely in surveys, results were weighted, or adjusted, to ensure that responses accurately reflect the population’s makeup by factors such as age, sex, education and race. In addition, the weighting took into account patterns of phone use — landline only, cell only and both types — by region.

No more than one time in 20 should chance variations in the sample cause the results to vary by more than plus or minus 4.1 percentage points from the answers that would be obtained if all adults in the U.S. were polled. For results among credit card holders and debit card holders, the margin of sampling error is plus or minus 4.8 percentage points.

There are other sources of potential error in polls, including the wording and order of questions.

The questions and results are available at http://www.ap-gfkpoll.com .

 


AP-GfK: Poll shows divide over increasing money for transit

WASHINGTON (AP) — A slight majority of Americans prefer living in a single-family house in the suburbs or a rural area with more land, even if it means driving long distances to get to work or run errands, according to a poll by The Associated Press-GfK.

However, a significant minority, 44 percent, would choose an apartment or smaller house in an urban area that comes with a short drive to work or the opportunity to use public transportation, bike or walk. The split also has a political aspect: Sixty-seven percent of Republicans and 53 percent of independents prefer suburban or rural living, while 55 percent of Democrats prefer urban areas.

The share of Americans who prefer suburban or rural living — 53 percent — is identical to the share who say the government should increase spending to build and improve roads, bridges and interstate highways. About 1 in 3 think current spending levels are about right, while just over 1 in 10 would like to see less money spent on roads.

Many states are struggling just to maintain current spending levels, and Congress has been unable to come up with a long-term plan to pay for highway aid that closes the gap between current spending and federal gas tax revenue.

Americans are more divided over building and improving public transportation such as rail and bus systems. Four in 10 say spending on public transportation should be increased, but just as many say current spending is about right. Only 18 percent say transit spending should be cut.

Contrary to the widely held notion that the millennial generation is flocking to cities and giving up their cars, younger people are not significantly more or less likely than older people to prefer urban living with a shorter commute and access to public transit, the poll found.

Matthew Wild, 33, an airline pilot living in the Los Angeles suburb of Hawthorne, said he favors increasing spending on both public transit and highways. The region’s freeways “take a real beating” from the traffic and need to be maintained, he said, but no new lanes should be added.

“We definitely don’t need to be expanding freeways anymore,” Wild said. “We’ve maxed out.”

He cited a highway near his home that was recently widened and now is as full as ever. He does, however, strongly support building more light rail transit locally and high-speed rail between California cities.

Wild said he’d much rather take a convenient local train than fight traffic in his car. He currently takes trains only a few times a year because there are no direct routes from where he lives to the places he wants to go, and indirect routes take too long, he said.

“The big problem with L.A. is that, given the lack of public transportation, sitting in traffic in your own car is still faster than taking public transit,” Wild said.

Jane McEntire, 62, who lives in Cartersville, Georgia, on the northwest fringe of the Atlanta metropolitan area, says traffic is horrible and getting worse.

Even so, she’d rather keep spending on roads and cut spending on public transportation. She says she’s lost confidence in the ability of state and local transportation officials to make improvements and not fritter money away on wasteful projects.

She is particularly incensed that officials used federal transit aid to build a slow-moving streetcar line in downtown Atlanta that is used primarily by tourists.

“I think they look really cute, but as far as usefulness — no,” she said. “When you have federal dollars that are coming into a state that are available and you spend it on these cars in Atlanta that go six or eight blocks back and forth … Why didn’t they take that money and spend it on something to help commuters?”

The AP-GfK Poll of 1,077 adults was conducted online from April 23 to 27 using a sample drawn from GfK’s probability-based KnowledgePanel, which is designed to be representative of the U.S. population. The margin of sampling error for all respondents is plus or minus 3.4 percentage points.

Respondents were first selected randomly using phone or mail survey methods and later interviewed online. People selected for KnowledgePanel who didn’t otherwise have access to the Internet were provided access at no cost to them.

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Online:

AP-GfK Poll: http://www.ap-gfkpoll.com

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Follow Joan Lowy on Twitter at http://www.twitter.com/AP_Joan_Lowy


AP-GfK Poll: Many approve Iran deal; Most don’t trust Tehran
WASHINGTON (AP) — Many Americans like the idea of the preliminary deal that would limit Iran’s nuclear program but very few people really believe Tehran will follow through with the agreement.

An Associated Press-GfK poll finds that just 3 percent said they were very confident that Iran would allow inspections of its nuclear facilities, remove plutonium from the country and shut down close to half of its uranium-enriching centrifuges as the preliminary deal says would be required. Nearly seven in 10 people said they were not confident, while 25 percent said they were only moderately confident.

The U.S., Germany, Britain, France, Russia and China are aiming to finalize a deal with Iran by June 30 that puts limits on Iranian programs that could be used to make nuclear arms. In exchange, economic sanctions on Iran would be lifted over time. Tehran denies any interest in such weapons but is negotiating in hopes of relief from billions of dollars in economic sanctions.

The next round of nuclear talks between Iran and six world powers will start Tuesday in Vienna.

Although more than half of Americans polled say they approve of making the deal, few people — 16 percent — are actually paying close attention to the complex Iran negotiations that have angered Israel and unnerved Gulf nations who are concerned about Tehran’s rising influence and aggressive behavior in the region.

The Senate last week passed legislation that would give Congress time to vote to reject any deal before sanctions are lifted. President Barack Obama would retain the right to veto lawmakers’ disapproval.

Israel’s strong objections to the deal could make a difference to many Americans. If forced to choose, a majority say it’s more important to maintain the U.S. relationship with Israel than to strike a deal with Iran. But respondents are divided along party lines, with nearly six in 10 Democrats saying the Iran deal is more important while seven in 10 Republicans believe ties with Israel are more critical.

Israeli Prime Minister Benjamin Netanyahu has been one of the harshest critics of the deal with Iran. Israel considers a nuclear-armed Iran an existential threat, citing hostile Iranian rhetoric toward the Jewish state, Iran’s missile capabilities and its support for violent militant groups.

More broadly, the poll found that Americans are increasingly interested in the U.S. role in world affairs, with 60 percent saying it’s an extremely important issue, up from 52 percent less than five months ago. Slightly more people also approve of Obama’s handling of the issue, increasing from 38 percent in December to 42 percent in the latest poll. Fifty-seven percent disapprove of Obama’s handling of the issue.

But overall, Americans are more likely to trust Republicans than Democrats to handle protecting the country.

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The AP-GfK Poll of 1,077 adults was conducted online April 23-27, using a sample drawn from GfK’s probability-based KnowledgePanel, which is designed to be representative of the U.S. population. The margin of sampling error for all respondents is plus or minus 3.4 percentage points. Respondents were first selected randomly using phone or mail survey methods, and later interviewed online. People selected for KnowledgePanel who didn’t otherwise have access to the Internet were provided access at no cost to them.

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Online:

AP-GfK Poll: http://www.ap-gfkpoll.com