Debit card $50 spending limit coming to a bank near you?

JPMorgan Chase, one of the nation's largest banks, is considering capping debit card transactions at either $50 or $100. The cap would apply even if you run your debit card as credit.  It seems that our illustrious congressmen have decided that banks are making just a tad to much money on interchange fees paid by merchants where you shop. According to CNN every time you swipe your debit card your bank charges the retailer an average fee of 44 cents, which it shares with its partners. The merchants pay about $ 16 billion in fees, this in a multi trillion dollar economy.  They include these fees in the prices we all pay. 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. 

The new regulations will cost Chase about $ 1 billion.  Most of the large banks will feel the pain to their pockets, but not to worry my dear consumers.  The banks will simply recoup there lost profits from, you guessed it, YOU! The merchants, bless their little hearts, will simply keep the extra money that they are not paying to the banks. In other words, consumers take it in the neck.  Again.  

Chase is a little ahead of the curve here, currently testing $ 3.00 monthly fees on debit cards and $15 checking account fees. As I've said in a previous post.  Free checking is going the way of the Dodo Bird.  If Chase goes forward on this, you can bet your sweet bippie that other large banks will follow.  Dodo birds of a feather flock together.

If a cap like this does make its way into accounts across the board, consumers would be forced to write checks, withdraw cash from ATMs, or put their spending on credit cards. "The whole model on the debit card side is in flux because of Dodd-Frank," said Brian Riley, senior research director at financial services consulting firm TowerGroup. "The unfortunate thing is that the people who will really get hurt on this are the people who need the most help."

Consumers are not always qualified for credit, and in fact over 60 pct of card transactions today are debit card not credit card.  If you have available credit, you are now going to be charged huge fees to access it as banks try to recoup lost revenue from that method of payment. Additionally, ATMs typically only dole out a limited amount of money at a time and checking accounts are being loaded with new fees.

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