As an American expat who holds an MBA degree and lives in the European Union I do have a personal opinion on foreign debit cards, which is bluntly put they work. Now let's be clear the intent of this diary is not to promote commercial debit card products of foreign banks. Nor is it to endorse any one bank. This diary does not present financial advice, but rather it is an opinion piece that offers general information.
Let's be clear shall we please, as yet no one knows exactly how this issue will shake out, but we do know is that some major American banking players are discussing seriously limiting debit card transactions between $50 and $100 in US currency. This is based on the fact that they are being regulated to reduce their debit card fees from about .44 cents per transaction to about .12 cents. The American banksters answer is always to try to crucify the American working class with draconian measures, in this case severely restricting the amount of debit card transactions. At which point we should ask in a Geo-global economy, have you considered getting a foreign debit card, which can be done by mail in opening a US dollar account? This diary will examine that issue in a short essay, not meant by any means as an exhaustive treatment of the subject matter, but meant merely as a discussion starter.
Debit cards: $50 spending limit coming?
NEW YORK (CNNMoney) -- Declined! Your debit card may soon be denied for purchases greater than $100 -- or even as little as $50.
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.
Why? Because of a tricky thing 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.
But 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.
That's a big enough cut to cost Chase (JPM, Fortune 500) more than $1 billion a year. And Chase may not be alone. Other major issuers are also projecting huge losses from the interchange fee cap.
Joe Price, president of consumer banking for Bank of America (BAC, Fortune 500), said in an e-mailed statement that the lower fee wouldn't fairly compensate the bank for the infrastructure and services it provides to retailers.
Briefly there are lots of good and very practical reasons for Americans to get a foreign debit card, which is drawn on a foreign bank. Regarding the upcoming regulation, it isn't clear that merely getting a foreign debit card will be a guaranteed fix. However what is guaranteed is that the US private banking system will no longer be able to control your transaction dollar amount limit. That at least may prove to be a blessing for people who prefer not to use a credit card, or who don't qualify for a credit card. This is especially true in view of the fact in this day and age unless you present a card with a Visa logo, or a Mastercard logo that has a limit in excess of $50 to $100 you may no longer be able to rent a car when traveling. You may find you are no longer able to rent a hotel room, because lots of hotels if you pay cash want a deposit of several hundred dollars, in the event there is any type of damage to the room. Other hotels unless you are able to present them with a Visa or Mastercard, just won't accept your business, because they no longer take checks. You may also find it difficult to purchase airline tickets or to pay for things such as on the spot auto towing or emergency vehicle repairs. This is especially true in view of the fact that banks have rather stringent limits on ATM cash withdrawals for any one day. In other words the American banksters are holding you and the cash balance in your account hostage. This of course comes on the heels of the 2008 banking bailout debacle, wherein prominent European media sources believe that a second coming Wall St banksters bailout is presently in the making.
The effect of this will be to force some credit card holders to start carrying a balance, whereupon huge interest rates may be applied.
The banks know that this may cause a hardship for people who don't qualify for credit cards, but frankly they don't care, because Wall St banksters are all about profit and not about people. They also know that this may cause people who have credit cards to start carrying a balance, wherein if it is not paid off immediately in full at the end of the month, they can apply huge interest charges which can be raised at any time for some thing virtually any reason, or if you prefer any excuse. Of course the American banking industry prays on peoples' fears especially your fear of carrying cash, and they in fact if you'll pardon the pun are banking on the fact your fears will send them laughing all the way to the bank!
Some people may ask how do I open a foreign bank account with a debit card attached to it?
This is pretty simple to do. There are lots of banks in the English speaking world that would be very happy to have your business throughout Canada, or Britain for example. These banks provide bank statements in English, offer online banking and even have believe it or not reciprocal deals with American banks to use their ATM machines free of charge. Depending on the bank you are with there may or may not be a foreign transaction fee. Historically speaking foreign commercial banking fees have been competitive with fees charged by the American banking system. Opening a bank account is as simple as doing a quick Google search for example Canadian banks. They may send or email you an account application, whereupon your signature may or may not have to be notarized. At which point you send it off and you have a bank account with a debit card attached to it. They will send you your secure pin number, and poof no more $50 or $100 debit card limit can be applied to you. At a time when the Wall St banksters industry has held the American public hostage through outrageous interest rates, bank fees, bank bailouts, this latest insult of restricting debit card transactions, may for many Americans be the last straw.
A brief history of debit cards.
Essentially speaking debit cards were just really ATM cards. They were designed to save banks money by not having to process checks and by not having to process cash withdrawals. Now this device which was invented to save banks money, is being sold to create still bigger profits for Wall st banksters, to the point where they think they can buck regulation by curtailing their absorbent transaction fees, by basically crucifying the American working public with draconian measures, such as creating potential limits of $50 to $100 on transaction amounts. To which this diary asks have you finally had enough? If so maybe it is time to think about getting a foreign debit card. Millions of American expats all over the world use them everyday of their expat lives and they use them even when they come back to the States to visit. You can do the same thing without ever leaving home.
PS: I would like to invite any interested readers to join us at the Class Warfare group at the Daily Kos. Here is a link and my email: email@example.com