Debit card limits reduced to $50/day?

I was reading an article that was claiming that major banks might reduce daily purchase limits to $50 or $100. It said that because interchange fees are capped at 12 cents by the Dodd-Frank Act, banks are going to reduce the limits to reduce their risk. Previously, the interchange fees they charged covered this liability according to them (or at least the article says they claim that). Is this true?


The article seems to say the limit would be $50 or $100 per transaction, not per day. Still a pain in the butt, but not quite so hobbling.

My bank lets me set my own limit, or call to get it raised.

Whether or not it will happen remains to be seen. I personally think it is a scare tactic, as harsh transaction limits will only drive people not to use debit cards – and many banks are using debit card fees to prop up other services. Heck, my bank pays me interest on my checking account as long as I use my debit card enough.

Risk? What risk? There is no risk to the bank on debits since there has to be money in the bank to cover it. That’s why the 12c cap is reasonable.

Now, without warning, my bank reduced the amount I could take out in Barbados to BDD500/day. This was only a minor hassle, being about USD250, but in previous years I had been in the habit of withdrawing BDD1000 at a time. But when I got back and asked the bank, they said that by arranging it beforehand, I could have any limit (up to BDD3000) I wanted.

This would really stink for me. I don’t have a credit card, so I use my debit card frequently for large-ish purchases over the Internet (largest to date was over $900 for a large bass guitar amplifier).

I can call my bank long distance, free, and get an instantaneous approval to withdraw any amount up to the full ballance minus a dollar on my debit card. Takes maybe a minute.

Sounds like you need a new bank. And anyone who has a bank that does it needs one too.


Read the article first. It is not what the banks are doing * now *, it’s what they may do in the near future. Banks are pissed off because they currently charge around .44 for a transaction and the Feds want to cap that at .12. So the banks are threatening to reduce the amount you can put on a debit card in a single transaction (which I assume would increase the number of transactions, thus giving them back their desired profit margin.). There might be other fees added to debit cards as well.

So they maintain the appearance of their margin, but the net income does not change. Somebody is protecting their bonus.

I’m assuming that’s their rationale. That, or drive people to use their credit cards which lets them charge a much higher transaction rate.

Banks make a lot of money from interchange fees. Right now it’s 44 cents per transaction. with the new law it will be 12 cents.

This law was enacted to help out the merchants who are the ones who end up paying the interchange fee when they accept debit cards. It has been proven that the costs for the bank to process that debit is less than the 12 cents that the fee will be lowered to.

Despite what the banks claim, this fee is not to “reduce their risk”. How does a 44 cent interchange fee reduce risk?

This new law will cut some of the profits for the banks. How do they propose to get their money and/or stike back? Cut our limit on debit purchases.

It’s all shit.

And, yes…I worked at a bank and know how this works.

Wow, $50 isn’t enough for a SUV-sized tank of gas or a week’s groceries for anything more than a (very frugal) single person. Think I’d just start using a credit card exclusively if they went ahead and did that.

It gets worse.

Now watch all those debit card users who don’t manage their money that well, get hit with bounce fees. Assuming a bounce fee would be in line with a bounced check fee and we’re talking maybe a $40.00 fee per bounced debit card transaction.

So if this “unbundling” stupidity actually happened, what would a bank’s electronic approval of a debit-card transaction mean to a merchant?!

I agree with the quote in the article linked by Duckster, that the validity of the transaction is intrinsic to, or inherent in, the bank’s approval. Isn’t approval a virtual statement by the bank to the merchant: “Yes, the person in front of you, or on your website, has the money in his account to pay the charge you just presented. Here’s your money”?!

If it isn’t that, then what does it mean? :confused: Wouldn’t bank “approval” of a transaction become wholly illusory, the electronic equivalent of the bank giving an “um” when asked a simple yes-or-no question?! :rolleyes:

(Yes, that’s a lot of question marks. It’s a questionable proposal. :p)

The risk of fraud should be less with a debit card as you have to have the card + a PIN number.

I guess there must be some other risk???

They already do.

I guess we’ll just have to see what happens, but I think the banks are bluffing. Would it be annoying if my debit card suddenly came with a lot of stupid restrictions? Yes. However, there are multiple ways to skin a cat, this would lead to people using other forms of plastic. Myself I have three revolving credit cards and a charge card, I’d probably just use the charge card exclusively if this went into effect.

Of course, most likely not all banks would do this, and the ones that just accepted the reduced interchange fee as a fact of life and didn’t try to annoy their customers would probably gain business at the expense of banks that don’t value their loyal customers.

Just a few weeks ago I talked an elderly relative into closing out all their primary checking account they had held for 30+ years at a financial institution because said local institution insisted on charging $0.10 for every debit purchase. In this day and age I explained to him that no one should be paying any sort of fee for using debit cards at checkout, not with 15 banks in town offering that exact service for free.

Slight hijack - Chase is already live testing $5.00 per transaction ATM fees for non-customers of their machines. HSBC is already charging $3.00 ATM fees.

Banks will push any way they can to make money. I think they are following the airlines model for a la carte fees because they work.

“$5.00 per transaction ATM fees for non-customers”, isn’t that crazy. It’s higher than I’ve ever seen, but $2-3 is very much in the range of “normal” when withdrawing money from other bank’s ATMs.

On the flip side I received a letter in the mail just yesterday offering me a $100 credit to a new checking account opened with a given bank. This checking account offered fee-free transactions at ATMs owned by other entities and would refund up to $10.00 per month in any fees charged at the point of transaction by the owners of the out of network ATM.

My current bank already offers that service though, so I had no reason to switch.

I’ve seen $5 fees in a casino, but out in the wild the worst I’ve seen so far is $3.50.

One thing I don’t understand; I’ve already got my account set so that if a debit would go over my limit, it gets denied. And that was because of some new laws, and to do that I had to wade through piles of crap from the bank essentially begging me to pay them overdraw fees for my own convienience. Would this nullify that? I very rarely overdraw my account but I get pretty close to the line a lot.