Currently, debit card users are allowed to spend up to a certain amount, between $300 and $1,500 a day, at retailers. This is allowed on one transaction or multiple transactions throughout the day. Recent banking regulations may have banks changing the limits on debit cards to extremely low limits.
At the present time, when a debit card is used to make a purchase, the bank charges the store, on average, about 44 cents. This money is spread out to various partners and sections of the bank and it brings in up to $16 billion each year. The Federal Reserve, as part of their strategy to overhaul Wall Street, proposes cutting that fee to a cap of 12 cents. The cut could cost banks up to $1 billion a year.
In response to the proposed cuts in the fee, JP Morgan Chase is looking at capping the amount a debit card user can spend to $50 or $100 per transaction. Bank of America is also looking at changing their debit transaction policy. According to CNN, the President of Consumer Banking at Bank of America said, Â“… 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.Â”
If the change goes into affect, consumers will be forced to use credit cards for large transactions or take money from the ATM, although ATM transactions are typically capped at $500. Some consumers cannot qualify for credit cards. As CNN reports, Â“Many consumers with bad credit aren’t able to qualify for credit cards — and when they do, it’s often with hefty rates and fees. Additionally, ATMs typically only dole out a limited amount of money at a time and checking accounts are being loaded with fees.Â”
JP Morgan Chase already charges a $3 monthly fee on some debit cards and up to $15 a month on checking accounts.