Action, reaction. Banks may cap debit card spending at $50

[GeronL]

http://finance.yahoo.com/news/Debit-card-spending-limit-cnnm-3728211539.html?x=0&sec=topStories&pos=8&asset&ccode

Declined! Your debit card may soon be denied for purchases greater than $100 -- or even as little as $50.

JPMorgan Chase, one of the nation's largest banks, is considering capping debit card transactions at either $50 or $100, according to a source with knowledge of the proposal. And the cap would apply even if you run your debit card as credit.

Why? Because of a tricky thing called interchange fees.

Right now, every time you swipe your debit card your bank charges the retailer an average fee of 44 cents, which it shares with its partners. Those little fees, however, add up to about $16 billion per year, according to 2009 data from the Federal Reserve.

But as part of the Wall Street reform legislation that was passed last year, these fees are being slashed. The Fed is currently proposing rules that would go into effect in July and would cap interchange fees at 12 cents.

That's a big enough cut to cost Chase more than $1 billion a year. And Chase may not be alone. Other major issuers are also projecting huge losses from the interchange fee cap.



excerpt

[Miss Mia]

Another reason I'm glad I use a credit union.

[GeronL]

Chase Bank introduces $5 ATM fee in Illinois and $4 in Texas as a test.

Not including the fees charged by your bank.

Action/reaction

[Vonne]

Another reason I'm glad I use a credit union.

Credit Unions, or their lobbyists I should say, are unfortunately some of the biggest advocates of this.  Awhile back, when this stuff was being debated, one of the credit union advocates stated that for small banks like most credit unions, debit/cc fees almost rival loans for bank revenue and profit.

Personally, I doubt I use my debit card but once every other month.  You dont have near the protection, benefits, or rewards as many charge/credit cards offer.

[Miss Mia]

Credit Unions, or their lobbyists I should say, are unfortunately some of the biggest advocates of this.  Awhile back, when this stuff was being debated, one of the credit union advocates stated that for small banks like most credit unions, debit/cc fees almost rival loans for bank revenue and profit.

Personally, I doubt I use my debit card but once every other month.  You dont have near the protection, benefits, or rewards as many charge/credit cards offer.

Interesting.  My credit union hasn't instituted any fees or charges like this (or at least so far).  I never pay any ATM fees, whether it's my CU or not, nor have they limited the amount I can spend per transaction (which I would have found out today, since I spent more than $50 at Home Depot earlier).  I use my debit card extensively, since I don't use credit cards. 

[Vonne]

I thought the dispute was at a standstill actually.  Assuming these limited changes in a few markets, were just warning blows by the banks trying to intimidate people.  Shrugs, we'll see what happens.

[Miss Mia]

I thought the dispute was at a standstill actually.  Assuming these limited changes in a few markets, were just warning blows by the banks trying to intimidate people.  Shrugs, we'll see what happens.

I'd be hard pressed to leave my CU.  There's an ATM machine for them in the building I walk through to get to mine.   

[GeronL]

I thought the dispute was at a standstill actually.  Assuming these limited changes in a few markets, were just warning blows by the banks trying to intimidate people.  Shrugs, we'll see what happens.

Its not a warning. Its a test.

Since government tightly restricted transation fees between credit cards/banks/retailers they have to find a way to make up the revenue. Whether that is by ramping up ATM fees, a monthly charge for having a card or a monthly charge for having a checking account or all of the above is the real question. All of them are being "tested" somewhere.

Good thing the government "solved" those transaction fee problems. lol.