Most consumers are familiar with a debit card. In many cases it is more important than the starter check package. One gets their card in the mail, calls the number on the back, removes the sticker, signs the back and then has immediate access to their funds. Many cards come with reward programs, like for every five dollars spent one gets a point. Reach 5,000 points and get a free toaster. Recent legislation is shaking up the debit card world.

In 2009, U.S consumer spending via debit cards rose to $1.45 trillion. The average debt transaction was about $38 - $44. Consumers simply like using their plastic to make purchases. While one would think that the credit card companies would cringe at the thought of people using a debit card versus a credit card, it's not the case. The credit card companies along with the issuing banks back debit cards, so they are getting paid per transaction as well.

What does differ between debit and credit cards is that in a credit situation, only the credit card company gets money per transaction. With a debit card, the issuing bank gets a fee. However, following the now infamous collapse of 2008, the Dodd-Frank legislation proposed in congress calls for a cap on debit card swipe fees. The deadline to formally determine this cap rate is April 2011.

The goal of the legislation is to limit the fees charged small businesses. Debit card swipe fees directly impact small business revenue, and this trickles down into a loss of hours for employed workers or the lack of funds to hire more, thus adding to the stagnant employment situation.

Currently the average fee is about $0.44 or 1% of the transaction. The proposed fee is $0.12 per transaction. Banks argue that limiting this fee will cause them to lose revenue and they will have to make it up by raising other fees (i.e. ATM fees) to cover the lost revenue. Some may decide to not issue debit cards.

Yet, all banks (and credit unions) are not created equal. The debit card legislation is focused on banks with $10 billion or more in total revenue. Banks like JP Morgan Chase and Bank of America are far above that threshold which may be one reason that on February 8, 2011 they stopped issuing debit rewards. They realize they will probably only get about 25% of the fees they were getting before the cap was proposed. However, this ten billion level opens the door for the local and regional banks, most of which fall well below that amount. They may still charge 1% of the cost of the transaction. As they will not be subject to the cap, they can offer perks to not only retain customers, but also attract those from larger banks.

Ironically, banks would still prefer that consumers use a debit card verse a credit card, because 12 cents or 44 cents is still money in their pocket (and out of the retailers). However at 44 cents there is much more of a push. That's why it's hard to see debit card rewards programs or debit cards going entirely away. But if this new legislation passes, look for the best debit card deals from the local bank down the street.

Remember when you got a free toaster for opening an account at a bank? Maybe it was a savings account, maybe a line of credit, but you got something as a thank you. Back then, one knew the bankers, the tellers and the account representatives. These days I can’t even keep up with the name of my bank – forget that toaster. Yet, banks are realizing that they are in effect a dime a dozen and have to differentiate themselves. Sovereign Bank is slowly impressing me with their products and push to get people back to a bank, rather than one in cyberland.

Sovereign has created a savings account promotion that triples their standard savings rate (of a fantastically dismal 0.30%) to a moderately acceptable 0.90%. To my dismay I can’t believe sub 1% is acceptable! The original marketers at the bank came up with the name “Triple Your Interest Savings” for the product.

The process to get this triple rate is surprisingly lacking in hoops to jump through, although you must have a Sovereign checking account. One must set up reoccurring automatic transfers from the linked Sovereign checking account. If the sum of the automatic monthly transfers is between $50.00 - $99.99, the interest rate doubles to 0.60%. If the sum of the automatic monthly transfers is $100.00 or greater, then the interest rate triples to the advertised 0.90%. There is a modest $10 opening balance required and if no automatic monthly transfers are scheduled there is a maintenance fee of $3.50. While this interest rate seems very low (and it is), all savings and money market accounts are.

At the same bank, the Premier Money Market Savings account, is offering a rate of 1.10% if your balance is $100,000 or greater. That same account interest tiering system is: 1.00% APY for balances of $50,000 - $99,999.99, 0.90% APY for balances between $10,000 – $49,999.99 and 0.35 APY for balances less than $10,000. This must be linked to a Premier Checking Account and if the aggregate amount of the Money Market and checking account is less than $15,000 – you win a $30 fee.

This 0.90% rate is close to the ING (1.00%) and FBNO Direct (1.10%) and allows actual physical interaction with a person. Imagine that! All of the information for his account may be found at http://www.sovereignbank.com/personal/banking/savings/triple-your-interest-savings.asp.

While many of those problems may have been a misunderstanding, Chase is taking steps to ensure that it doesn’t happen again. The bank has announced a few new programs designed to deal specifically with military customers and veterans of our country. And while these programs are a great way to honor and support our active military members, the CEO of Chase said the programs “are a start, but in no way a finish” to make things right. The mistakes that were made last month included illegal fees and interest charged to military members who are on active duty. Under the law, active duty service members cannot be charged more than six percent on any debt that they have before they get deployed. And the law protects their home, too, because they cannot be foreclosed on until after they come back from their active duty.

Here are some of the services and products that Chase plans on implementing in the next couple months:

Loan Modifications – Chase will begin to improve a program to modify mortgages for active military members in April. In order to qualify, the borrower must be delinquent in their payments or show that they are having trouble making their payments. The program will include military members who have served on active duty dating as far back as September 11, 2001 and it goes above and beyond the government’s current modification program.

Mortgage Rate Reductions: For military members who are protected under the Servicemembers Civil Relief Act, Chase is implementing a rebate-type program. Qualifying borrowers can receive a rate reduction to 4 percent if they are on active duty. This can extend for one year following the end of their active duty. The current rate is 6 percent for military members so Chase’s plan is even better.

Home Ownership Assistance – Chase has announced it will not foreclose on any homes in which the mortgage was taken out by a service member who is currently deployed. The Servicemembers Civil Relief Act only protects military members if they entered into their mortgage before leaving on active duty, so Chase’s program goes a step further in the right direction. In conjunction with some nonprofit partners, Chase also plans to donate 1,000 homes to veterans and current military members through the next five years.

Jobs for Veterans – Chase is joining with other companies to hire at least 100,000 veterans and military personnel over the next decade.

These are just a few small ways that Chase is planning to say “I’m sorry” to the military members and their families that got mistreated in recent months. Do you think it’s enough?