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By Blake Ellis, staff reporter March 10, 2011: 9:34 PM ET
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. 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 (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.
Joe Price, president of consumer banking for Bank of America (BAC, Fortune 500), said in an e-mailed statement that the lower fee wouldn't fairly compensate the bank for the infrastructure and services it provides to retailers.
And consumers would end up feeling the pain when Bank of America is forced to recoup costs "by increasing the cost of their everyday debit card transactions, limiting their payment choices, and impacting industry innovation," according to the email.
Credit cards from hell
Aside from mulling over a limit on transaction amounts, Chase is already testing $3 monthly fees on debit cards and $15 fees on checking accounts in certain states. Additionally, the bank announced in November that it has stopped issuing debit rewards cards.
A Chase spokesman declined comment on this story.
Debit card spending limit? Banks consider a $50 cap - Mar. 10, 2011
JPMorgan Chase Also Considering $50 Cap On Debit Card Purchases - The Consumerist
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This is crazy. Absolutely crazy. And a sign of the times.
Yet another reason why NOT TO have a bank account.
JP Morgan Chase and Bank of America are seriously
thinking about doing this. I'm sure more banks are
to come.
==================================
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. 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 (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.
Joe Price, president of consumer banking for Bank of America (BAC, Fortune 500), said in an e-mailed statement that the lower fee wouldn't fairly compensate the bank for the infrastructure and services it provides to retailers.
And consumers would end up feeling the pain when Bank of America is forced to recoup costs "by increasing the cost of their everyday debit card transactions, limiting their payment choices, and impacting industry innovation," according to the email.
Credit cards from hell
Aside from mulling over a limit on transaction amounts, Chase is already testing $3 monthly fees on debit cards and $15 fees on checking accounts in certain states. Additionally, the bank announced in November that it has stopped issuing debit rewards cards.
A Chase spokesman declined comment on this story.
Debit card spending limit? Banks consider a $50 cap - Mar. 10, 2011
JPMorgan Chase Also Considering $50 Cap On Debit Card Purchases - The Consumerist
==================================
This is crazy. Absolutely crazy. And a sign of the times.
Yet another reason why NOT TO have a bank account.
JP Morgan Chase and Bank of America are seriously
thinking about doing this. I'm sure more banks are
to come.
==================================