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Banks' wrath: High ATM fees! 30% APRs! Vanishing rewards!

May 9, 2011: 8:23 AM ET

NEW YORK (CNNMoney) -- If you're a bank customer, you could soon be facing higher ATM fees, a $50 spending limit on your debit card, or a 30% late payment penalty on your credit card. And those debit rewards you've been enjoying? Say goodbye to those.

These are just some of the changes banks have made -- or threatened to make -- in recent months.

Why? Because consumers are quickly becoming collateral damage in the "swipe fee war" raging between the banks and the Federal Reserve.

"Swipe fees," are the fees retailers pay banks every time customers swipe their debit cards. These fees -- also called interchange fees -- currently average 44 cents per swipe and bring in billions of dollars in revenue for the banks each year.

But the Federal Reserve has proposed capping these fees at 12 cents -- a more than 70% cut.

And the banks aren't happy about it.

In fact, they've been lobbying hard for the Fed to delay the decision. And members of Congress have also taken up the cause, proposing to delay the passage of the amendment, which is part of the Dodd-Frank financial reform act. But as of now, the Fed is still slated to enact the new cap by July 21.

If there is an eventual cap on interchange fees, consumers are in for some major changes.

Here are some of the ways you might soon be paying the price (if you aren't already):

ATM fees heading higher: ATM fees are on the rise at some of the country's biggest banks.

JPMorgan Chase (JPM, Fortune 500) just finished testing $4 and $5 ATM fees for non-customers in some areas. While the bank has decided not to apply these fees nationally, and reverted back to its original $3 fees, the trend is catching on.

HSBC Bank USA (HBC) started charging all non-customers a $3 fee in March for using its ATMs. Previously, about 40% of its ATMs charged either $1.75 or $2.50.

TD Bank used to let customers use any ATM free of charge, but the bank is now charging $2 for customers who use out-of-network ATMs -- unless you have a "deeper relationship" with the bank (which translates into carrying a high minimum balance and paying a monthly fee of $25).

Pay late? Here's a 30% interest rate: Bank of America (BAC, Fortune 500) customers who make late payments on their credit cards may soon see their interest rates jump.

Beginning June 25, the nation's largest credit card issuer will charge a penalty interest rate of up to 29.99% on future balances for credit card customers who fail to make timely payments.

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The rate will vary based on a customer's credit profile, so one late payment won't automatically trigger a 29.99% penalty rate, a Bank of America spokeswoman said.

Bank of America, which hasn't charged a penalty rate since 2009, is one of the last major banks to implement this stiff penalty. Other issuers, including Chase and Citi (C, Fortune 500), are already charging penalty rates ranging as high as 29.99%. But Wells Fargo said it eliminated penalty rates in 2010.

Spend more than $50? Declined! Your debit card may be denied for purchases greater than $100 -- or even as little as $50.

JPMorgan Chase (JPM, Fortune 500), one of the nation's largest banks, is considering capping debit card transactions at either $50 or $100. And the cap would apply even if you run your debit card as credit.

The revenue banks get from interchange fees helps to offset money lost from fraudulent transactions. So with the Fed's proposed cap in place, banks argue they won't have the money to protect themselves against fraud. Limiting consumers' ability to pay by debit card is one way to hedge the risk, banks say.

"If banks cannot recapture their fraud-prevention costs, it is likely that a lower percentage of transactions at the point of sale would be approved," Bank of America's president of consumer banking Joe Price said in an e-mailed statement.

Say goodbye to debit rewards: Debit card rewards programs are vanishing at several major banks. Current customers of several major banks can earn rewards for actions like spending, carrying high balances in their checking accounts and making minimum deposits, and can redeem the points for cash or other rewards.

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Wells Fargo (WFC, Fortune 500) is no longer offering its debit rewards program for new customers. But beginning on March 27, Wachovia was no longer offering this benefit to new customers. And Wells Fargo cut them off on April 15.

Existing customers at both banks will remain unaffected. JPMorgan Chase notified existing customers that their debit rewards programs will disappear July 19. The bank eliminated debit rewards for new customers in February.

But the bank said it will reinstate rewards for all customers if the Fed decides to delay the interchange cap proposal. To top of page

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