To recoup their lost profits from legislated reductions in interchange fees, fees which hurt small merchants particularly hard, J.P. Morgan Chase is considering capping the amount a card holder can charge in a single transaction to $100, even if you run the debit card as a credit card. Some news sources say the cap might be as low as $50. The younger debit card/credit card dependant generation might see this as an inconvenience. The rest of us old timers who managed for decades to handle our cash flow needs without plastic will be laughing our asses off. You'll have to either figure out your cash needs ahead for a certain time period or, shudder, relearn how to write a check!
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I don't have an issue with writing checks, but won't checks also pose a financial risk to small merchants?
It's not likely they will have to take a check. Most small merchant purchases, excluding filling up the gas tank these days, average about $40.00, which makes the cap point of $50 vs $100 an interesting equation.
The real issue here is that the days of free checking and debit card usage are coming to an end. Small merchants had been paying the cost of those consumer perks through the interchange fees. The banks and card processors are working to find a replacement revenue stream or curb their usage.
Guess its back to carrying the all-purpose, never get turned down gift certificates: cash.
"The younger debit card/credit card dependant generation might see this as an inconvenience"
I am hardly a part of the younger generation and I will find this a major inconvenience.I do not like carrying a lot of cash with me so I use my check card as a credit card.It is the same as paying cash but without having to have the cash with you.I use my card for almost every purchase.As far as writing checks,why would anyone want to go back to carrying your checkbook every where you go?Now I will have to wait longer at checkout lines waiting for people to fill out their checks.Also,when going to a gas station you will have to wait behind people buying their smokes and lotto tickets and you will have to pre-pay for a fill-up.When you are done you will have to go back and wait for your change.There are a lot of places that will not accept checks so you will be forced to make more stops at the bank for cash to make your purchases.I like the convenience of my debit card and hope that limits will not be imposed.
What is to prevent a retailer from running multiple transactions until they reach the desired amount? There are way too many ways to get around this.
The full version of this article explains that the biggest banks are debating placing the caps because the new laws require lower per transaction rates. If this happens, smaller banks will step in and take advantage of being able to obtain/handle the business.
My bet is that nothing will change on the surface, maybe behind the scenes.
I dislike this as I do large purchases online and use my debit card instead of cash for any large purchases where carrying around large wads of cash are not so smart (come on...Im not down with walking into best buy with $500+ for a tv). Checks are old school, slow and at this point a dead system. This just strikes me as money grubbing from the banks.
I dont ever use my credit card - but my debit handles all my large transactions and ebills. Boo hiss.
It's the big banks that are having a major hissy fit and are talking about transaction caps.
Go to a credit union instead. I kind of doubt they will implement caps.
Occasionally, if my husband has my debit card, I write a check at Kroger or Meijer. (Hubby doesn't want a card of his own to carry, yet he "borrows" mine all the time. Sigh.)
At big retailers, the check writing process actually doesn't take any longer than a debit transaction. All you do is sign your name, just like with a card. Then the clerk runs the check through a printer that fills out everything else. (And shows you what printed, so you know its for the right amount.) They don't even check your id anymore at the big stores.
So, if this goes through, at least it shouldn't slow up the checkout process at big grocery stores. (One place where people will be likely to spend over the debit limit.)
I'm with the rest of you - no way am I carrying around a lot of cash. But I can live with checks, if need be. Already leave the checkbook in my purse anyhow.
P.S. I should note that I got used to leaving the checkbook in my purse because of Costco. Like most people, I had stopped carrying a checkbook on a regular basis a long time ago. Just for clarification. :)
I don't use a debit card. I pay cash, I write checks and I use a credit card. I pay the balance on my credit card in full each month. The bank hates me.
I carry very little cash (like $5 or less) at any given time. Both my wife and I use the debit card for most purchases, plus we use online bill paying for almost every bill. I bet we write less than five checks per month. Also, I have been in the habit of using PayPal for many smaller online purchases, and if this prediction turns out to be accurate, PayPal might see an uptick in business.
The weird part about this is that checks sent electronically (all of them after they get to a bank) are processed in the exact same manner as debit transactions.
MJ, I enjoy intentionally paying by check when I want to increase the processing overhead of the recipient. Columbia Gas and Buckeye Cable are the two that come to mind. I also like to post date my checks and send them in early so they have to hang on to it until they can cash it.
I think this whole thing is a non-issue unless you are in the business of processing/sending millions of electronic transactions. This is just media hype. If it ends up affecting the consumer it will be through interest rates and other services, not transaction fees.
I'm with you madjack. I just never got into the habit of using a debit card. The last ones the bank sent us we didn't even activate. I find I keep much better track of my expenses if the wallet holds so much money for the week and if the wallet is empty purchases stop. Simple. Also having done a stint as a bank auditor I know from the inside just how dangerous debit card usage can be.
Using a debit card for an online purchase is risky. You cant dispute the transaction if something goes haywire, even if you run the debit card as a credit card. If the card youre using is linked to a checking account youre stuck. With a strictly credit card online purchase - not linked to a bank account - you can dispute it with the credit card company.
Banks are facing the loss of a revenue stream. They will make it up - somewhere. If they cant get it from the merchant, it will come from the customer - you.
I'm with MJ, I use my credit card for everything and pay off the balance every Friday. Makes it much easier to track my cash flow.
We use the credit card the same as madjack & dbw. Free accounting service...for now.
Although, make sure to look at your statement every month. I was using one card and all of the sudden I noticed that my "terms" had changed and they instituted a $1.50 monthly transaction charge--meaning if I use the card for anything in a month, $1.50 is tacked on to my bill per month for activity. Obviously, that card's use was discontinued soon after for my bills.
If they all do it, then I guess instead of using credit cards, I'll use my credit union's bill pay service for utilities and cash for purchases. Like holland says, when the money runs out for the week, no more purchases.
I use my credit card for everything and simple pay it off at the end of month. Plus I get 1-2% of my transactions toward's my kid's college fund. It's like buying each of my kids a text book every year. Every little bit will help.
The only time I ever use a debit card is at Costco.
^^Upromise Card, SensorG??? That's the one we switched to...