Bank Rewards Programs are Going the Way of the Dinosaur
Bank debit card rewards programs are vanishing. CNN Money reported last week that several major banks are planning to do away with the rewards altogether because of the law changes from the CARD Act and now from the Federal Reserve’s proposed limitations on “swipe” fees.
Debit card rewards programs allow customers to accumulate points for spending a certain amount, carrying high balances and making minimum deposits. The rewards are in the form of cash, gift cards and higher-priced consumer products.
The CARD Act has allowed banking customers to “opt out” of overdraft lines of credit on their checking accounts, which has put a big dent in the banks’ revenues from over-the- limit fees, interest and penalties. Plus the “swipe fees,” which are the charges that retailers must pay the banks every time customers use their debit card, may be reduced by the Fed if this proposal goes through.
As a consequence, some banks are retaliating by raising ATM fees and cutting rewards programs, and they’re threatening to impose debit card spending limits. They have to make money somehow, right?
Here’s a brief rundown of the major banks’ current reward program status:
Wells Fargo will no longer offer its debit rewards program to new customers as of March 27th at the Wachovia branches and as of April 15th at Wells Fargo. Existing customers will not be affected, yet.
JP Morgan Chase has already torpedoed the rewards program for new customers and they just sent out a notice to their existing customers that their rewards program will disappear on July 19th.
Likewise, SunTrust will not award new points after April 15th and customers must use existing points by January 1st, 2012.
Citibank hasn’t made any changes yet but they’re in the process of “evaluating” their debit card rewards program.
Bank of America and TD Bank are not announcing any changes to their programs right now and neither U.S. Bank nor PNC Bank was willing to make a comment. One can assume that if it was good news for the consumer they would have broadcasted it.
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