It may soon be time to rethink the automatic usage of a debit card, which unlike a credit card is tied to actual money held in a bank account, and which has been the preferred plastic of consumers eager to avoid annual fees and debt quickly piled up by swiping its cousin, the classic credit card.
The WSJ has the story:
… banks are thinking about imposing annual fees of $25 or $30 on debit cards, according to people familiar with bank strategies. Some also considering limiting the number of debit-card transactions that a customer can make each month, these people said. Another idea circulating in the industry: Limiting the size of a purchase that a customer could make with a debit card. At the same time, reward programs for debit cards are likely to get the ax, these people say.
This consumer-unfriendly combo—more fees, less rewards—is being considered to replace revenues lost since regulations have made it more difficult for banks to collect billions in debit card overdrafts and other fees. New fees and requirements for debit cards are surfacing for the same reason that big banks are also rolling out new checking account fees: Banks are losing money because they can’t charge old fees, so naturally they’re countering with some new fees.