How would you like to be forced into using a credit card over your debit card? Ok, so no one will be holding a gun to your head to make you use it. But if JPMorgan Chase makes a final decision to place a cap on debit card purchases, you will have to switch to your credit card or cash once you hit the imposed limit.
Under consideration is a $100 debit card limit because Chase would prefer its customers use credit cards since they are more profitable. Chase may have borrowed the idea from Bank of America, which has already floated a proposal for a similar cap for their debit cards. However, there is no doubt that many banks are considering the same thing since the Dodd-Frank Wall Street Reform and Consumer Protection Act passed last summer. The Durbin amendment to the legislation requires the Federal Reserve to impose new limits on what banks can charge retailers when customers swipe their debit cards. The Fed is due to finalize its plans by the end of April and banks will lose billions of dollars in revenue if proposed limitations go into effect.
What does the cap mean? At $100, this means that your card could be declined if you try to make a purchase over this amount. There is even a possibility that the bank might make the cap as low $50. This could definitely alter consumer behavior.
Chase and other banks warned that changes like this could take place if new rules concerning debit fees were put in place. Banks argue that the lost revenue will hurt their ability to provide the highest-quality service to customers and cover losses due to fraud..
Chase and other banks continue to battle it out with the Federal Reserve. Customers may just need to cross their fingers and hope that in the end all will be better for them. Maybe the Federal Reserve could start figuring out how to prevent such a debit card cap. Otherwise, customers will have to pull out the credit card, a pre-paid card, or the good old-fashioned greenbacks.