Big changes coming to use of debit cards incl. for travel

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

With the passage of the Dodd-Frank legislation, many were expecting some changes from banks on debit cards and, perhaps less so, credit cards. Earning miles was one of the benefits many expected to be curtailed. From discussions at FlyerTalk, that is already happening, particularly with the few debit cards that have been earning miles. Major banks are already announcing termination of those mile earning benefits.

Something with even greater impact on travel, however, is also being reported. Some banks are considering a daily limit on usage of debit cards of $50 or $100, although none has yet formally announced that policy. Whatever changes are coming may just be a few months off, in time to impact summer travel.

Debit cards have been the key for many to exchanging money abroad. If these cards have a $50 a day limit imposed, they will be far less useful for that purpose.

[ArtsieAng Super Moderator Find all posts View Profile Close ArtsieAng]

With the passage of the Dodd-Frank legislation, many were expecting some changes from banks on debit cards and, perhaps less so, credit cards. Earning miles was one of the benefits many expected to be curtailed. From discussions at FlyerTalk, that is already happening, particularly with the few debit cards that have been earning miles. Major banks are already announcing termination of those mile earning benefits.

Something with even greater impact on travel, however, is also being reported. Some banks are considering a daily limit on usage of debit cards of $50 or $100, although none has yet formally announced that policy. Whatever changes are coming may just be a few months off, in time to impact summer travel.

Debit cards have been the key for many to exchanging money abroad. If these cards have a $50 a day limit imposed, they will be far less useful for that purpose.

A $50 limit would render these cards useless, at home, abroad, anywhere. I can't see it happening.

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

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A $50 limit would render these cards useless, at home, abroad, anywhere. I can't see it happening.

The discussion at FlyerTalk was that the purpose of a low limit was to push customers into using credit cards, where the banks fee generation was better.

Even if they went with $100, the usefulness of these cards would be severely diminished.

One of the major banks (Chase, if my recollection is correct) is supposed to be replacing all its debit cards in the next few months and the terms of the new cards has not been revealed. They have however already cancelled the earning of ff miles on at least some of their existing cards. Of course, the key will be whether other banks fall in line or use this as a competitive advantage for themselves. Since the problem for the banks is what Dodd-Frank did to merchant fees, what we might see is a shift to consumer fees, such as an annual fee for a debit card with a higher limit or for no limit other than how much you have in your account.

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

The debit card was a win-win for banks and the legislation took most of one of the wins away. I think banks are just reacting to the lower fee they will be getting and should they make debit cards undesirable, the consumer may actually end up better off. I have never had and have no desire to ever get a debit card.

[lawren2 Malibu Beach Barbie & A Super Moderator Find all posts View Profile Close lawren2]

I live off my debit card and rarely have a lot of cash on hand. My bank rarely sees me in physical form, everything is EFT'd, wired, transfered or debited. It makes it much easier to see where I am spending money and precisely how much.

I will however go back to cash if Debit is limited to $50-$100 daily. I do have credit cards and pay them off each month but it is far easier to lose track and overspend with them. I'm guessing the banks are counting on that.

[gandalf252002 Senior Member Find all posts View Profile Close gandalf252002]

I as well try to use my debit card for everything as it allows easier tracking of my spending than does cash. I am probably alone on this one, but being Canadian does any one know if this applies here as well?

[bnoble Senior Member Find all posts View Profile Close bnoble]

it is far easier to lose track and overspend with them.

When I was a graduate student, and needed to budget much more carefully, I used to treat my credit card purchases like a debit card. I would enter a debit into my checking account balance (tracked via Quicken) for each purchase. So, it "looked like" the money was already gone. It wasn't all that difficult, and made it easy to pay off that bill each and every month. Once I got into the "pay it off" habit, it was easy to stay in it, even now that, for most purposes, my resources exceed my daily spending.

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

I as well try to use my debit card for everything as it allows easier tracking of my spending than does cash. I am probably alone on this one, but being Canadian does any one know if this applies here as well?

Canadian banks certainly would not be under this legislation as to operations in Canada. However, I do not exactly know how it applies to transactions of a foreign bank that occur in the US.

The problem stems from the Durbin amendment which limits the fees banks can charge merchants. This will make millions for some of the major retailers who will have their fees reduced while cutting bank profits. The consumers are caught in the crossfire between the merchants and the banks.

When someone uses a Canadian debit card to make a purchase in the US, I suspect that the bank would be bound by the limitations of the Durbin amendment. While a Canadian bank would have no reason to impose such limits on transactions in Canada, they may be tempted to impose such limits on transactions in the US where their merchant fees are substantially reduced by the Durbin amendment.

[JWC Super Moderator Find all posts View Profile Close JWC]

I have a debit card but have never used it. I use my credit card for all transactions possible, including all travel expenses, utility bills, and everything I can pay with it. With a credit card, I have better fraud protection, get a float on the money and get good rewards. I always pay the balance in full every month so there is never any interest charges and there is no annual fees.

[Laurie Senior Member Find all posts View Profile Close Laurie]

Debit cards have been the key for many to exchanging money abroad. If these cards have a $50 a day limit imposed, they will be far less useful for that purpose.

Yes, this will definitely be a drag for overseas travel, where credit card cash withdrawals are much more expensive than debit card withdrawals because interest on cash advances start immediately. Even tho we use a Cap One cc whenever possible on purchases, we sometimes need a few hundred whatevers in cash every few days. Too bad!

[Dancingfish Senior Member Find all posts View Profile Close Dancingfish]

We could always go back to using CHECKS and Travelers Checks....ughh

[3kids4me Super Moderator and Super Mom Find all posts View Profile Close 3kids4me]

I have a debit card but have never used it. I use my credit card for all transactions possible, including all travel expenses, utility bills, and everything I can pay with it. With a credit card, I have better fraud protection, get a float on the money and get good rewards. I always pay the balance in full very month so there is never any interest charges and there is no annual fees.

Ditto, except I do pay an annual fee on a credit card that gives me miles, and on AmEx because the benefits appear to be worth it for me.

I use my debit card only at the ATM. I wasn't even aware that miles could be earned on debit purchases.

[JWC Super Moderator Find all posts View Profile Close JWC]

Ditto, except I do pay an annual fee on a credit card that gives me miles, and on AmEx because the benefits appear to be worth it for me.

I use my debit card only at the ATM. I wasn't even aware that miles could be earned on debit purchases.

What Amex card do you have that charges an annual fee? I am just curious. I have an Amex card from Bank of America but I hardly ever use it. Last time I used it was in May 2009. There is no annual fee and it pays rewards. The card I always use is Visa from my credit union. There is no annual fee and the rewards are better than my Amex card. It also gives a longer time on the float.

[3kids4me Super Moderator and Super Mom Find all posts View Profile Close 3kids4me]

What Amex card do you have that charges an annual fee? I am just curious. I have an Amex card from Bank of America but I hardly ever use it. Last time I used it was in May 2009. There is no annual fee and it pays rewards. The card I always use is Visa from my credit union. There is no annual fee and the rewards are better than my Amex card. It also gives a longer time on the float.

The AmEx cards issued from banks (I used to have one from Citibank) are a bit different than AmEx cards issued directly from AmEx.

I have a platinum AmEx, which provides some very unique benefits. I'm not sure I will keep it, but they offered me 100,000 points to open the account and spend $1,000 in four months so I'm giving it a try. I also have a gold AmEx premier rewards card, which offered me 50,000 points for opening the account and charging $450 in four months.

What I like about AmEx (directly from American Express, not the bank ones) is that I can have separate cards for my children over the age of 15, part of my account but with separate numbers (so if they lose the card, the whole account doesn't have to be changed over), and with whatever credit limit I choose for them on their particular card. My gold card also gives double points for grocery and gas purchases and triple for travel related purchases.

[flexible Senior Member Find all posts View Profile Close flexible]

We could always go back to using CHECKS and Travelers Checks....ughh

We went inside a bank and were charged about $85 USD to cash $1,000 USD in travelers checks in Nice, France in May 2009. We learned that our Citibank ATM card was a cheaper way to get cash so we returned home with the remaining traveler checks so we could deposit them at face value.