Debit cards: $50 spending limit coming?

[William769]

NEW YORK (CNNMoney) -- 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.

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.

http://money.cnn.com/2011/03/10/pf/debit_cards_limit/index.htm?hpt=T2

[Marrah_G]

1. Then people will use cash and they will get no fees.

[damntexdem]

11. Then people will go to banks and CUs that don't have such low limits.

Then retailers will complain about having to go back to taking paper checks.

[hlthe2b]

2. I don't think retailers are going to want to see checks return....

This is pure crap.

[Aerows]

3. Retailers don't like checks...

... because they have to clear, they bounce, and you have to go through an approval company if you don't want them bouncing all over the place. My family's business refuses to take checks over a certain amount, simply because they have been burned before.

I can't wait for the people that have become accustomed to putting large purchases on their ATM cards suddenly having to go back to the bank for cash, and how irate they will be.

[lpbk2713]

4. No limit on my D/C yet.

But there is a 25 cent fee on every transaction except for at the ATM's owned by the Credit Union.

[phantom power]

5. Credit. Union.

say, there's that word "union" again....

[blogslut]

6. This sounds like a scare tactic

I have to wonder if the real issue is whether or not the credit card consortium(s) are raising debit card fees on issuing banks.

[Cleita]

7. Screw them. I'll go back to writing checks.

But wait! The idea of a debit card was to eliminate processing all those checks to save money!

[Speck Tater]

8. This would never fly.

Any bank that does this will lose all it's customers to whatever bank doesn't. It would be suicide for the banks. If it did become a regular thing I'd just go to cash like I did in the days before debit cards.

[Warpy]

9. Doing that would render the cards utterly useless

and we'd have to either start giving out our bank account numbers for shopping online (nothing I want to do, even with a junk account for that purpose) or ordering from catalogs and mailing checks, slowing the whole transaction to a crawl.

This is going to be as popular as anthrax. Most people will simply chop up the cards and pay with check or cash, the latter costing them a bit more money and making none.

[kenny blankenship]

10. How will people buy groceries then? Wheelbarrows of cash?

Look, banksters, you can have hyperinflation or you can have $50 debit card limits, but not both.

[cyberswede]

12. They want people use their cards as a charge, rather than debit.

I think this is an incentive by the banks and credit card companies to get people to run transactions as credit rather than debit.

If I understand correctly, they have a better deal on each purchase if the transaction is run as credit rather than debit. Our CU gives us cash back if we use the card as credit 20 times in a month (as opposed to debit).

In our case, the $ is debited from our account whether we run the transaction as credit or debit, and it's handy when we use small vendors who don't accept debit transactions.

I think it's unfair to limit the amount of debit transactions, though.

[HopeHoops]

13. That's because Visa and MasterCard get as much as 5% from merchants on each purchase.

Debit cards aren't subject to those fees UNLESS it has a Visa logo and you use it as a credit card.

[walldude]

14. Great.. 50 bucks.. by the time they implement it

I'll be able to by a bag of Fritos and a coke...

Can't even fill up my car on 50 bucks anymore.

[Pacifist Patriot]

15. I was just thinking, "there goes using a debit card at the gas pump."