I have received several promotions by banks paying me hard cash for using their debit cards a certain number of times. Being a FW, of course, I accepted the deal but cannot understand what is in it for the banks when they can get more commission from stores if I were to use my credit card instead.
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welookgoodcom said:also credit card they risk lending you $ and if you pay by grace lost $. Debit card no rish involved
I am talking about using debit card a few times for very small amounts. They never make money from me anyway on interest but only on the commission paid by merchants.
No, credit card companies do not charge the same fees for CC's as Debit cards. Debit card fees are a lot less. That's why you will see some places accepting debit cards but not credit cards. I think banks are pushing debit cards so that people have less cash in there accounts, potentially going below minimums, etc. and there is no risk.
Fact is that Citibank, MBNA, BoA, JPMorganChase issue most of the credit cards in the world so they are the ones monopolizing merchant fees. Other banks may be pushing debit cards and then later potentially pushing fees or trying to gain loyalty to their checking accounts.
Banks have agreements with the companies represented on their debit card (VISA, MC, etc). They make a percentage of the transactions flowing through their debit card. Thus, they can afford to give you Cash Back or incentives. It just reduces the overall percentage they receive from their partner companies.
Sovereign Bank, which absorbed my old bank, issued me a debit card with the VISA symbol. I brought it back and insisted on a regular ATM card without the VISA symbol and they said they don't have that option. I told them that's bullcrap and I closed my account. Why are they forcing this debit card on us?
joebloe said:Sovereign Bank, which absorbed my old bank, issued me a debit card with the VISA symbol. I brought it back and insisted on a regular ATM card without the VISA symbol and they said they don't have that option. I told them that's bullcrap and I closed my account. Why are they forcing this debit card on us?You have it easy...the VISA logo on my bank's ATM card will release a deadly cloud of poison gas if it's not used as a debit card. It's a shame I can't just, you know, not use it as a debit card.
bhupeshm said:No, credit card companies do not charge the same fees for CC's as Debit cards. Debit card fees are a lot less. That's why you will see some places accepting debit cards but not credit cards. I think banks are pushing debit cards so that people have less cash in there accounts, potentially going below minimums, etc. and there is no risk.
Fact is that Citibank, MBNA, BoA, JPMorganChase issue most of the credit cards in the world so they are the ones monopolizing merchant fees. Other banks may be pushing debit cards and then later potentially pushing fees or trying to gain loyalty to their checking accounts.
That statement makes no freaking sense. The whole point of bank deposits is so banks can lend that money out. People having less cash in their accounts will lower their reserve...
They want people to stop using checks and use their debit cards. Paper checks cost money to process, while with debit cards they make money.
I work in a branch and I'll give you two reasons why your bank wants you to use your debit card. First and foremost, the more services the bank is providing you the less likely you are to leave. If you become dependent on your debit card you will be less likely to switch banks and have to wait 10+ days for your new card to arrive. The other great thing about debit cards is that merchants take days to report purchases, merchants hold MORE than the transaction amount, and customers don't log debit card purchases in their check registers as often. The vast majority of my customers believe debit card purchases hit their account immediately. This is not the case. I'm estimating here but I'd say over 50% of our overdraft fees come from customers who made debit card purchases all weekend, called to check their balance, and then wrote a check that they thought would clear without an overdraft. If you log your debit card purchases in your check register this can all be avoided and I'll be out of a job...
theahnfahn said:I work in a branch and I'll give you two reasons why your bank wants you to use your debit card. First and foremost, the more services the bank is providing you the less likely you are to leave. If you become dependent on your debit card you will be less likely to switch banks and have to wait 10+ days for your new card to arrive. The other great thing about debit cards is that merchants take days to report purchases, merchants hold MORE than the transaction amount, and customers don't log debit card purchases in their check registers as often. The vast majority of my customers believe debit card purchases hit their account immediately. This is not the case. I'm estimating here but I'd say over 50% of our overdraft fees come from customers who made debit card purchases all weekend, called to check their balance, and then wrote a check that they thought would clear without an overdraft. If you log your debit card purchases in your check register this can all be avoided and I'll be out of a job...
A good bank will place a memo for the amount of the debit purchase immediately before it is actually cleared from your account
I know banks prefer signature based transaction as they carry normal credit card transaction fee. I was told pin based tranactions charged are flat fee $.50 cent per transaction does not matter the dollar amount. And many banks limit the pin based transaction to $500 per pin transaction but normally have a higher daily pin limit. I know some of the big merchants in California sued Visa/MC over fact they make transaction limit lower than daily limit thus causing the merchant to swip the card more than once on large purchases which causes them to pay $.50 cent transaction again. I dont remember the outcome of the case tho.
jkimcpa said:theahnfahn said:I work in a branch and I'll give you two reasons why your bank wants you to use your debit card. First and foremost, the more services the bank is providing you the less likely you are to leave. If you become dependent on your debit card you will be less likely to switch banks and have to wait 10+ days for your new card to arrive. The other great thing about debit cards is that merchants take days to report purchases, merchants hold MORE than the transaction amount, and customers don't log debit card purchases in their check registers as often. The vast majority of my customers believe debit card purchases hit their account immediately. This is not the case. I'm estimating here but I'd say over 50% of our overdraft fees come from customers who made debit card purchases all weekend, called to check their balance, and then wrote a check that they thought would clear without an overdraft. If you log your debit card purchases in your check register this can all be avoided and I'll be out of a job...
A good bank will place a memo for the amount of the debit purchase immediately before it is actually cleared from your account
Banks place a 'hold' or 'autherization' for the amount pretty much immediately, but this is released after x amount of time (24 hours in business days probably), and many merchants do not process through the transaction for several days. That makes an account yo-yo, and people who rely on ATM machines or tellers or phonebanks or online banking, rather than keeping their own records, end up thinking they have more money than they do, because they check after the hold is released but before the charge comes through. Banks are aware of this, but quite frankly, if you are too lazy to bother keeping track of what you spend, then they have no problem taking your $25 or $30 or $35 or $40 in OD fees. An average overdraft or insufficent fees situation costs a bank between $2 and $3. The rest of that OD fee is pure bank profit.
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