Banks Cancel Debit Card Rewards Programs | CreditShout

Banks Cancel Debit Card Rewards Programs

By Dawn Allcot / April 11, 2011
Banks Cancel Debit Card Rewards Programs


Credit Shout may collect a share of sales or other compensation from the links on this page.

The effects of the Durbin Interchange Amendment began to rear their head this spring, with the first of the big banks canceling their debit rewards card programs.

A few weeks ago, I got a letter in the mail from Chase saying that the bank is ending its debit rewards card program (which has earned me close to $200 this year, for the low price of a $25 annual fee.) Chase is not the only big bank to end its debit rewards program.

Here’s the scoop so far:

  • Chase Bank stopped enrolling customers in debit rewards in February; on July 19, the debit rewards program will end and customers will have their annual fee refunded as a credit to their checking account, pro-rated.
  • U.S. Bank stopped enrolling new customers in debit rewards in February.
  • Wells Fargo announced it will stop accepting new enrollees to the debit rewards program as of April 15.
  • PNC Bank is stopping debit card rewards for free checking account customers in September 2011.

You can still find debit rewards, you just have to hunt a little more, or perhaps turn to online banking options. Here are a few popular choices:

  •, an online-only bank, is still advertising 2% cash back rewards on its debit cards.
  • Capital One still offers Rewards checking accounts online or at Capital One branches nationwide.
  • Look for other banks to draw customers away from some of the larger banks by advertising debit rewards cards.

Will You Leave Your Bank For Cutting Your Rewards?

Most finance experts and consumers alike saw this coming with the Durbin Interchange Amendment, which limits interchange fees merchants can charge on debit cards to 12 cents per transaction. Banks could lose $13 billion annually with this limit.

However, it’s a hassle to switch banks and most people probably won’t make a mass exodus away from their bank of choice just because they can no longer earn cash back using their debit cards. Instead, more people may begin relying on their rewards credit cards for every day activities like shopping, online bill paying and booking travel arrangements.

As long as you make your payments within the grace period (check your credit card’s terms and conditions to determine the grace period, the amount of time you have to pay off a balance with no interest charges) and pay your credit card balances in full every month, you can still rack up the rewards.

Other Benefits to Using Credit Cards

In fact, credit cards actually pay off better than debit cards in the long run. Here are a few reasons why:

  • You can improve your credit rating by using your rewards credit cards wisely.
  • Many credit cards offer bonus points and offers not available on debit cards. For instance, through the first quarter I used my Chase Freedom credit card, rather than my debit card, to buy groceries in order to get 5% cash back — an offer not available with my rewards debit card.
  • Credit cards offer benefits like price protection, extended warranty protection, and car rental insurance not available on debit cards.
  • You can’t use your debit card for renting a car in many places, for that matter.

The real draw to debit rewards cards is convenience: You don’t have to remember to pay a bill, since the money comes straight out of your checking account.

If you’ve been doing online bill pay with your debit rewards card, it may be worth it to take a few minutes to switch over to your rewards credit card as the default bill pay setting if your bank is abolishing its debit rewards program. Otherwise, this shouldn’t represent a big lifestyle change for most consumers.

One more tip: Cash in existing rewards as you accrue them. Right now, each of the banks claim your rewards points will remain intact for the indefinite future. But do you always trust your bank?

What about you: Will you switch banks if your bank gets rid of your debit rewards? Or do you need a better reason to switch?

The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone. Additionally, the opinions of the commenters are not necessarily the opinions of this site


Leave a comment: