U.S. Bank. J.P. Morgan Chase. Wells Fargo. Big banks are axing their debit card rewards, blaming regulatory changes that make the programs too expensive to offer.
Chase and U.S. Bank stopped enrolling new customers for debit rewards in February. Wells Fargo announced late last month that it would do the same beginning April 15.
Both are continuing debit rewards for existing customers -- for now. But Chase customers will stop earning points come July.
The banks are responding to the Federal Reserve proposal to cap the fees collected from retailers when a debit card is swiped at the register. The proposed 12-cent-per-transaction limit is well below the average 44 cents currently earned by banks. Banks say that if this goes through, consumer pocketbooks will feel it. The Fed is expected to make a final ruling later this year.
Like credit card rewards, debit rewards are earned for using your card. They accrue in the form of cash, or points that are redeemed for merchandise or airline tickets. Reward debit cards typically earn between two to four points for every dollar spent -- half what's earned by credit cards -- and are offered by nearly six in 10 financial institutions.
In these economic times, "rewards are a big draw," said Bill Hardekopf of www.lowcards.com. But they're not the main draw for debit cards, which have surpassed credit cards as America's plastic of choice.
People like debit cards because of the seamless access to their checking account, plus the ease of electronic transactions without the fear of ballooning debt. The focus is not on the rewards programs. Many customers don't even know they exist, said Patricia Hewitt, who studies debit cards for Boston-based Mercator Advisory Group.
If your bank took debit rewards away, would you go through the headache of switching banks. Probably not, right?
