Recent studies have found that many consumers will close their checking accounts when banks increase service fees, or add new ones. In an effort to keep customers, these financial institutions may begin soon offering them prepaid debit cards that carry lower fees, according to a report from MSN Money.
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Another reason for banks to begin offering these accounts to consumers is because of potential new rules related to interchange fees, the report said. While a proposed Federal Reserve Board regulation would limit the amount banks can charge retailers for processing purchases made with debit cards to just 12 cents, the same is not true of credit cards and prepaid cards. This means that more consumers using prepaid cards would increase revenues lost to the new debit card regulation.
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Some banks have already begun adding new fees for accounts linked to debit cards, and others have significantly scaled back related rewards programs. At least one major national bank is also discussing whether to set a limit on debit card purchase amounts.