When was the last time you wrote a check for your groceries? What about paying cash to fill up the tank in your car? I know there consumers across the country who still write checks for daily purchases and even forego the convenience of paying at the pump, but debit cards and plastic in general seem to be the payment method of choice for today’s on-the-go consumer. The vast majority of my purchases are made with my debit card.

However, the convenience of swiping your debit card may soon be coming to an end if some financial institutions have a say. I like to call the brouhaha that is building the debit card cap and fee debacle.

The Fed is proposing a cap on interchange fees, fees that retailers pay to financial institutions to cover the cost of swiping a debit card. According to CNNMoney.com, the average fee is 44 cents, but the proposed cap is 12 cents. That doesn’t sound like much — just a few pennies — but when you take into account the millions of transactions processed daily, this could be a big hit for a financial institution’s bottom line.

So what's a big bank to do? How about putting a smaller cap on debit card spending? Most debit cards already have a cap — for instance my bank limits debit card transactions to $600 per day. Honestly, I don’t recall a time when I needed to use $600 in one day on my debit card, but it's nice to know that I have that money available should I need it. What do banks think would be a more realistic cap? The suggestion that is floating around personal finance sites this week is a new cap of $50 to $100.

Seriously? A single trip to the grocery store costs more than $100. Sure, I could carry cash with me, but I really love the convenience of my debit card.  I could write a check, but that just seems like a step backwards. I don’t recall the last time I wrote a check at a retail outlet, but it is safe to say it has been years. Can you imagine all the paper waste that we would generate as a nation if everyone had to revert to check writing?

Obviously you know my opinion on capping debit card transactions — and this includes debit cards run as credit — but I’m curious about your thoughts.

Do you think banks should cap debit card transactions to recoup the money they stand to lose if the interchange fee cap is implemented?

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