Posted on Monday, April 4, 2011
Put another nail in the coffin for debit card rewards. Chase is notifying customers that they will no longer be able to earn points after July 19. The points accrued up until then will not expire.
Chase had already closed off enrollment in the rewards program to new customers as of Feb. 8.
Chase says it's ending the program because of a regulation that will sharply limit the fees it can collect from merchants whenever customers swipe their debit cards.
The cap on the debit swipe fees banks can collect was mandated last year under the financial overhaul known as the Dodd-Frank Act. The current proposal would cap fees at 12 cents per transaction, versus the current 1 percent to 2 percent of the transaction amount.
The banking industry says the change could slash its debit swipe fee revenue by as much as 90 percent.
A final rule is expected from the Federal Reserve by April 21, unless Congress delays the deadline. The rule will take effect three months later. That's also around the time Chase customers will stop earning debit rewards.
Bank of America, Citi and Wells Fargo say they haven't yet decided on any changes to their debit programs.
The Chase Program
Chase's debit rewards program was previously free and open to anyone with a checking account. Customers earned 1 point for every $5 spent, versus 1 point for every $1 spent with credit cards.
Customers could also pay a $25 annual fee to earn points at a faster rate – 4 points for every $5 spent.
The bank has 27 million checking accounts, but declined to say how many of those were enrolled in the program.
The Associated Press