Rules could change how you use debit cards

March 10, 2011 3:59:59 PM PST
New rules may be coming to your debit card that could end up costing you money. The rules would cap how much you could spend when you use a debit card and that could force you to use other forms of payment. There are reports that banks are considering ways to get you to use checks, credit cards and cash rather than your debit card. The reason is, banks can make more money if you dump the debit card.

When you come to the rodeo, be sure to bring plenty of money.

"You are going to use your debit card," said debit card user Tim Stevens. "I am not going to sit here and lie."

But at next year's rodeo, Stevens may not be able to use his debit card if he spends more than a bank imposed limit of between $50 and $100. That's a potential change that, if implemented, would force consumers to use a credit card or write a check when making big purchases.

Debit card user Tammy Stevens said, "I don't think they should be able to tell you how you spend your money with a limit on it."

Tammy is not the only one who does not like the idea of a bank-imposed limit on debit purchases.

"It's my money," said debit card user Eva Torres. "I should be able to spend it the way I want to spend it."

Torres says the debit card limit would force her to use her checking account more. Torres says that will cost her because her once free checking account now has a monthly fee added if she does not maintain a high balance. Torres says fees could cost her more than $200 a year.

"We live paycheck to paycheck," Torres said. "So when the paycheck comes in, you send it out and pay your bills and you are left with whatever is going to get you through to the next week, and it sure is not $1,000."

The debit limits are one way banks can recoup their losses on interchange fees. Recently laws slashed those fees which are charged to merchants, but add up to about $16 billion a year for banks. With limits on debit cards, consumers may start using credit cards instead.

Leah Napoliello with the Houston Better Business Bureau explained, "With credit cards, of course, there are high interest rates involved."

Right now the debit card limit is something banks are considering. But we have already seen free checking accounts go away and some banks have stopped enrolling people in rewards programs, so changes are coming. The debit limit may be one of those changes.