Debit card rewards next on the chopping block at large banks
The next customer perk to go on the chopping block at the nation’s largest banks is debit card rewards. JP Morgan Chase stopped offering debit card rewards to customers in February, and will stop giving rewards to debit card swiping customers entirely in July. The program was closed due to the ongoing battle over the pending cap on interchange fees.
Banks contend they will be brought low with interchange fee cap
The possible cap on interchange fees, or the fees banks charge merchants to transmit payment from debit purchases, has caused the nation’s largest banks to start curtailing customer rewards and incentives, such as free checking. The next casualty of the interchange fee battle is likely to be debit card rewards, according to Bloomberg. Leading the charge in cutting back on rewards for customers is JP Morgan Chase, which stopped offering enrollment into the debit card rewards program to new customers in February. Chase will stop offering rewards altogether on July 19, though any reward points that have been accrued by that point will still be honored. Consumers may eventually need same day loans to use their own money.
Fees at ATM locations going up as well
Another response to financial reform laws has been to raise fees for using automatic teller machines out of a bank’s network, according to MSNBC. JP Morgan Chase, the second largest bank in America, is currently testing $4 and $5 fees for customers who use Chase machines that aren’t Chase customers. The program is testing $4 fees in Texas and $5 fees in Illinois. All other states will retain the $3 fee for non-Chase customers, which is above the $2.33 national average. Chase customers will still pay only $2 per transaction at non-Chase ATMs, which is also above the $1.41 national average. Chase has the second largest ATM network in the nation. TD Bank and Citi bank are following suit, and Wells Fargo and Bank of America are likely to not be far behind. The idea of Chase, Bank of America and Wells Fargo having to run for installment loans because legislation prevents them from gouging customers is not likely to cause many people discomfort, but there is a catch.
Credit unions would also suffer
Merchants are charged interchange fees by for-profit banks and non-profit credit unions alike, according to Forbes, and that is why credit union trade groups such as the National Association of Federal Credit Unions, oppose the Durbin Amendment to the Dodd Frank Act. Credit unions and community banks are not as easily equipped to absorb the loss of revenue from interchange fees, which will be lowered to 12 cents per transaction from the current average of 44 under the current proposal by the Federal Reserve. Currently, bills are being introduced into the House of Representatives and Senate which would delay the Durbin Amendment from taking effect for two years, in order to study the possible fallout.