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Friday, March 11, 2011

Example #68: Banks Never want you to win

Remember the Wall Street reform bill passed last year?  And the banking legislation that was supposed to help customers and empower them from erroneous fees and other bank gouging?

Debit card spending limit? Banks consider a $50 cap (CNN-Money)  -- "JPMorgan Chase, one of the nation's largest banks, is considering capping debit card transactions at either $50 or $100, according to a source with knowledge of the proposal. And the cap would apply even if you run your debit card as credit."

~  Yes, you read it correctly.  Banks would limit how much of your own money you could access to make purchases for a given transaction.  As it is, banks control your cash access at ATMs (usually $500/day) and tellers look at you as a criminal if you dare to withdraw more than $2k at a bank window.   Now they want complete control of you at point of sale.

Why?   It's called Interchange fees.

"Right now, every time you swipe your debit card your bank charges the retailer an average fee of 44 cents, which it shares with its partners. Those little fees, however, add up to about $16 billion per year, according to 2009 data from the Federal Reserve...  As part of the Wall Street reform legislation that was passed last year, these fees are being slashed. The Fed is currently proposing rules that would go into effect in July and would cap interchange fees at 12 cents... big enough cut to cost Chase more than $1 billion a year. And Chase may not be alone...."

~ Wait, there's more...

"Aside from mulling over a limit on transaction amounts, Chase is already testing $3 monthly fees on debit cards and $15 fees on checking accounts in certain states... If a cap like this does make its way into accounts across the board, consumers would be forced to write checks, withdraw cash from ATMs, or put their spending on credit cards."

~ The $3 monthly fee adds up to $36/year --  To access your $$

The banks would much prefer you use credit cards.  They can't charge interest on a debit card purchase where you have 100% of the funds to cover in your bank.  They can charge up to 30% interest when you use a standard credit card and then perhaps get lazy and pay off the charges in installments.

If/when this does occur, the best revenge to the banks and credit card companies is to simply take all non-essential $$ out of the bank.  Just pay for basic everyday things with cash-  food, gas, etc.. this way you Punish the petty banks by denying them Any interchange fee and it is the ultimate way to ensure you keep to a budget without temptation to overspend your means.

Banks Never want you, the consumer to come out ahead-- Ever.

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