Will Debit Card Rewards Programs Go Bye-Bye

In wake of the debit card Interchange reform bill, major credit card issuers are chopping expenses to make up for lost fee income. The easiest to chop–debit card rewards.

Currently only big banks such as Chase, US Bank, PNC and Wells Fargo have announced either cuts or eliminations to the rewards programs. Initially Wells Fargo stated that the program would not be offered to new card customers, now the company has announced that the program will go away entirely.

Smaller banks and credit unions, under $10 billion in assets, are exempt from the legislature to reduce debit card interchange fees. However, the expectation is that smaller institutions may feel economic pressure to do so.  This could mean the end of an era for debit card rewards.

If smaller card issuers were allowed to continue to with high interchange fees, merchants might begin refusing to accept their cards. This would force exempt institutions to charge lower fees. In the long run this could be a death sentence for small banks and credit unions, causing consolidation in the industry and less consumer choice.

Federal Reserve Chairman, Ben Bernanke announced a delay of the Durbin Amendment, which set to lower interchange rates on debit cards. This would allow time to review the letters the Fed has received in regard to the process. Bernanke said the Fed would have a recommendation in place by July 21, the date the limit is supposed to go into effect.

The elimination of rewards programs by banks is in anticipation (or maybe demonstration) of the passing of the Durbin Amendment.

There is still time to voice your opinion:

Please contact your Senators and Representatives TODAY and tell them that the Durbin Amendment is unfair to consumers

Once you enter your zip code in the space provided, you will see one or two letters depending on your Senators’/Representatives cosponsorship status.

U.S. SENATE – http://capwiz.com/cuna/co/go/inters575

U.S. HOUSE – http://capwiz.com/cuna/co/go/interh1081cd1

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