Earlier this year, we discussed the effects of the Durbin Interchange Amendment on debit card rewards. Major banks began cutting their rewards this spring as a result of the Amendment, which limits the fee that banks can charge to process debit card transactions to 21-24 cents – down from the average of 44 cents in such fees that were collected in 2010. Basically, they’re anticipating less revenue and cutting their expenditures accordingly. You can see the full article here.
As with everything else in the world, you can’t have your cake and eat it, too. With the lower fees come lower rewards. Thus, the fault does not lie exclusively with your bank if you are losing your rewards. Of course, you probably won’t hear that in the sales pitch for such legislation, but there are ups and downs to every issue – and this is no exception.
The latest addition to the club of banks that have canceled debit card rewards is BMO Harris Bank. Beginning October 1, 2011, customers will no longer have the ability to enroll in or earn points in the debit card rewards program that the bank offers. Those who accumulated points prior to October 1 will be able to redeem them through December 31.
Other banks, such as Wells Fargo and SunTrust, have also instituted debit card usage fees after making similar moves. However, there is no indication that BMO Harris will follow their lead.
If your bank has canceled or plans to cancel it’s debit card rewards, you can always shop around. Ally Bank, an online bank, has a debit card rewards program that gives cash back for purchases that are made at 20 retailers. These include Target, Best Buy, Dick’s Sporting Goods, iTunes and others. An example is $1 back for spending $2 or more at iTunes – effectively a 50 percent off sale if you spend only two bucks! You’ll get more cash back on other purchases, so don’t fret if that mighty dollar isn’t going to cut it for you. They also provide interest on their checking accounts, have no minimum balance requirements and do not charge a monthly fee. This is definitely a worthwhile consideration if you’re considering ditching your current bank for a better deal on debit card rewards and in general.
Other online banks, such as Bank of Internet, offer rewards on debit cards as well. Being a savvy consumer can pay off with rewards, even when it seems like everyone out there is cancelling their rewards program. Don’t be afraid to shop around if your bank is not giving you a good deal.
In addition, consider alternate forms of payment if your debit card is not working out for you. There are still plenty of good credit card rewards out there – just scan this site and you’ll find quite a few. For those who would rather not spend on credit, there is always cash – an especially attractive payment option for those who dislike credit cards and are being charged debit card fees. In any event, there are plenty of options out there, so losing your debit card rewards doesn’t have to be a big problem. Just find what works best for you and stick with that until a better deal comes along.