Banks consider $50 cap on debit card purchasesPosted: Updated:
PHOENIX - JP Morgan Chase, the nation's third largest bank, is considering a debit card transaction cap of either $100 or $50, according to a source with knowledge of the proposal. The source told CNN Money that a transaction cap would apply even when a debit card is run as credit.
The threat to impose transaction limits is likely a reaction by the banking industry to a new federal regulation designed to protect consumers and small businesses from excessive banking fees.
Currently, banks charge retailers an average of 44 cents every time a customer uses a debit card. In 2009 the banking industry raked in roughly $16 billion thanks to those fees.
Last year Congress passed sweeping reforms aimed at Wall Street, including a proposal to cap debit card transaction fees at 12 cents. That would add up to more than $1 billion a year for Chase.
Fredric Bellamy, with the Arizona Consumers Council, points out that the economy has left many families in the state without credit cards, relying on debit cards for all their purchases.
Bellamy believes that banks could be threatening this new debit card cap in an attempt to get the regulation changed before it is finalized in April. The 12 cent cap for banks is currently scheduled to go into effect in July.
JP Morgan Chase has not confirmed or denied the potential limits.