Debit cards $50 spending limit coming?

[Xicano]

Debit cards: $50 spending limit coming?

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.

That's a big enough cut to cost Chase (JPM, Fortune 500) 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.



http://money.cnn.com/2011/03/10/pf/debit_cards_limit/

http://www.youtube.com/watch?v=AIdMVRsVzig

[notadmblnd]

1. so they'll force us to make more transactions?

thats how they're going to raise revenue? Wow, they are brilliant:sarcasm:

[county worker]

4. They'll force you to use cash and charge you to go the the ATM to get your cash.

Just watch and see if I am not right.

[fasttense]

11. I never use a debit card.

I use cash and simply cash one check at our local bank whenever I shop.

The only charge I get is for purchase of checks which run about 2 cents each.

[ReggieVeggie]

2. BOO FREAKIN' HOO

Oh, those rich companies making money off of transactions that cost them nothing...those poor fools! :crazy:

[GreenStormCloud]

36. There is no such thing as a free lunch. There is a cost to those tranactions.

Somebody has to buy the computers, pay the electricity, pay the technicians, etc for you to be able to swipe the card. Back in the 1960s, probably before you were born, my bank charged me ten cents for each check they had to process. When adjusted for inflation, fifty cents to handle a transaction is pretty cheap. And the cards are much more secure than checks were back then.

[FBaggins]

3. Alternatively, they may start charging a monthly fee to have the card.

Or increase the monthly fees on checking accounts that they have just begun to restore.

[SoCalDem]

5. One more reason for the rest of the world to laugh their asses off about

as we all go back to writing checks & wasting more time in lines as befuddled clerks try to decide whether or not to take the check..

and watch the banks howl when they have to process all that paper again.

Remember all the howling when ATMS first came out? when people figured out that there would be fewer and fewer tellers?

In the final analysis, banks will screw us all.. they always do.. and we will either adapt, or not. It's out of our control.

It will cripple internet purchasing..and that may be the real goal..

Watch for the banks to start charging a "card fee" to the USERS, for purchases over $50... they'll call it something benign, but if they want it, they'll get it.

[virgogal]

13. How will this cripple internet shopping? I'm no financial genius so

forgive me if that seems like a silly question.

[SoCalDem]

14. I recently bought a dining set online. It was WELL over $100 & I use my debit card

Online shopping that is limited to $100 will kill online shopping, since debit/credit cards are the usual way people pay of their purchases.

Many of us choose to NOT have credit cards...except for the debit cards with visa/mastercard logos on them.

[virgogal]

19. Thanks for the explanation. I am an onlline shopper but always

use a credit card so I was a tad confused.

[Lance_Boyle]

26. You should NEVER use a debit card for online purchases.

Even though it has the VISA logo on it, you are on the hook for any fraudulent purchases, which is not the case when you use a credit card. Debit cards are great for point-of-sale, but only PHYSICAL points of sale - use them online at your own (considerable) risk.

[virgogal]

27. I have never used my debit card at all,but thanks for the advice.

[fishwax]

31. but with a "debit" card you can still run it as a "credit" purchase

and (unless I'm wrong) the "credit" option wouldn't be subject to the $100 limit. Banks have long tried to encourage check card users to make purchases through the "credit" network--for instance, my bank sometimes offers promotions like "every Xth purchase nationwide is free," but with the specification that only "credit" purchases count.

[cui bono]

33. I wouldn't use a debit card online. If someone gets into your account you are screwed.

At least with credit card you can have any charges reversed and the thieves can't raid your account.

Hopefully you have a "shopping account" that only holds the amount you are currently spending.

[JVS]

17. Your assumption that things are better elsewhere is false.

In Germany a checking account will cost you several euros per month and the cards only became usable at grocery stores several years ago. For much of the world cash is still king.

[SoCalDem]

18. Locally I prefer cash.. but online I will always need a card..

Maybe this is a sly way for banks to get people who gave up credit cards (me) to have to go back to them:grr:

The last time we went anywhere it was to Tahiti, and they had no problem accepting our debit cards.. maybe it;s all different now

[Johonny]

23. that's what I was thinking

doesn't processing paper checks cost a lot more than maintaining electronic transactions?

I know some banks were pushing "rewards" cards. They have a fee, but offer a rewards, they then gamble on if you'll use your card enough to get over than initial fee to get positive in the cash back. They win either way because more transactions using their card means more transaction fees for them, even if they dish you out a little cash back.

[sarcasmo]

6. It's all about fees now. Put you're money ( if you have any) into the Credit Union.

[MNBrewer]

7. good thing I have a mattress!

Depression 2.0

[Sherman A1]

8. Don't use a debit card

use a credit card, rack up whatever rewards you can and pay it off every month.

[hunter]

9. Ha, ha. You think you'll have $50 after the banks have their way with you?

Nope, they'll be charging the government forty cents on a dollar to process your food stamps.

[Posteritatis]

10. Can someone explain US debit cards to me?

That seems kind of surreal. Here in Canada, my "debit card" is just my bank card as opposed to some special additional card you need to get; if someone has a bank account, they have a debit card, which is simply their bank card. Transaction limits are usually a per-day thing and often quite high; mine's a couple thousand dollars which is about par for the course. Using them simply withdraws the money from the bank account of one's choice and transfers it to the merchant/etc.

I get the impression from discussions of US debit cards that it's not like that there; am I off somehow?

[superduperfarleft]

12. My wife's from Toronto, so I had to explain the same thing to her.

What you guys have there are what we call "Debit cards." It's a card that is issued by your individual bank and works with the merchant sending a direct debit to your checking account, just like you were at an ATM.

In the US, we have those (but not as commonly anymore), and we also have cards that are called "Check Cards" (or at least they were when they first came out). They're issued by your bank, but with the logo of a national CC company like Visa or Mastercard on it. Not only can they do the direct debit thing and an ATM transaction, they can be used wherever credit cards are accepted. The charge is sent by the merchant to the credit card company (instead of your bank), who then just charges your bank for the amount, and then the bank debits your bank account. In the US, when you run one of those, the cashier will usually ask you "Credit or debit." With "debit," you run the card and put in your PIN number. With "credit," you run the card and then sign for the transaction at the end like you would with a credit card.


:edited out the last part, because now that I think about it, that part may have been wrong:

I can't remember exactly how I explained it to her, but the above sounds like the gist of it.

[laundry_queen]

32. Those may be coming to Canada soon

I read something about it recently. Some of Canada's major banks are planning those here too. I'm looking forward to it, as I have crappy credit but would still like to buy stuff online (and not have to keep buying those dumb, expensive gift cards)

[onethatcares]

15. pay with a check.

and for gauds sake keep your register up to date, that means no kiting or hoping. Fuck the banks, what they really want to do is have our paychecks deposited directly, and then dole out our money at their wim.

[Bucky]

16. This is the natural consequence of regulating markets. You always have to keep up w/the weasels.

Most of my transactions are for under $100. I assume that's pretty normal. But I guess there are people who have debit cards and can't get approved for credit cards. This limit will fuck them and fuck any businesses they might otherwise patronize.

[1monster]

22. Or those who got sick and tired of being screwed over by the credit card companies

and refuse to use them anymore...

On edit: I usually use my debit card for grocery shopping (something that rarely comes in under $100 any more). Before that, I used checks.

I stopped carrying cash in my college years when a roommate stole first my air fare back home for Christmas and later my rent money.

[Johonny]

24. I agree

regulating is an on going process.

[jeff47]

20. So, their plan is to get more people to switch to credit unions then? (nt)

[cui bono]

34. That's what I did when WAMU screwed up. The manager tried to convince me not to pull my money out.

I said then they shouldn't have been gambling with it. I'm so much happier at my credit union.

[Lucian]

21. This makes no sense.

So if I have $200 worth of groceries, I'm going to have to do four different transactions?

:wtf:

Waste of time. Waste of effort. Millions of pissed of people.

Fuck banks.

[Politicalboi]

25. Some gas stations out in Ca

Charge you 35 to 40 cents to use debit and maybe credit too. So they get their bank fee paid by customers. I feel it's fair only because that you or I can go somewhere else that doesn't charge a fee. I think the ATM fees are fair, but not the fee the bank charges for using a non bank ATM. The ATM machine is like a pay phone. Remember those. LOL! It's the convenience. But the bank should not charge 2.00 for the transaction.

[Amerigo Vespucci]

28. Some pumps in Silicon Valley...

...have stickers on them warning that debit card purchases will incur a "minimum fee" of between $50-$70, which stays on the card for a WEEK, then the amount above the purchase price drops off.

I don't know all of the "whys" behind that one...I just spotted the sticker and always pay cash for my gas as a result.

[Gormy Cuss]

29. That's called blocking and gas stations aren't the only POS to do that.

Hotels and some restaurants for example do the same thing. Gas stations however are much more common places for people to have regular transactions and the hold amounts caused some people to overdraw their checking accounts even though they really hadn't spent all of their funds -- they just exceeded their funds available. The stickers are a good way to ensure that people understand that the block will be applied.

If you use a debit card like a credit card (where a signature is generally required)at a POS where you pay before the final amount is known, the retailer asks for an authorization that will likely cover the amount of the sale. The processing of the actual charge can takes several days and after that it can take several more days for the retailer to clear out the overage.

If you use the debit card more like an ATM card (by providing a PIN) the exact amount is deducted immediately from your checking account.

The added complexity of the signature transactions is used as a justification to charge much higher interchange fees than for sales where a PIN is used. The former has been a cash cow for the banks who charge the fees.

[cui bono]

35. I always pay cash because they sell gas cheaper for cash at a lot of stations. n/t

[deacon]

30. Well, thats nuts. Can you imagine the billions lost in online business? Too staggering to think

about. And if the idea is to drive people back to credit cards, millions won't qualify anymore. It's sounds like it's more of a bluff move to get some fee reductions.

[TBF]

37. Sounds like a bluff to me as well - retailers would fight the banks on this. nt