USAA Bank, which provides banking services to military personnel and their families worldwide, announced last week that its debit card customers will be adversely affected by the new debit card interchange fees, otherwise known as the new swipe laws.
USAA released a statement last week, after the Federal Reserve announced its final rules on interchange fees which go into effect October 1, saying that USAA will end its debit cards reward program as a direct reaction to the new cap on interchange fees. The bank claims that by eliminating the debit card rewards program, it will be able to keep its other services, such as free checking, available to its customers.
Banks across the nation are expecting a big drop in revenue as a result of the new rules. Debit card swipe fees will now be capped at 21cents to 24 cents versus an average of 44 cents before the rules changed.
Currently, USAA’s debit card reward program assigns one point for every $2 the card holder spends. Points are accumulated and can be redeemed for various types of merchandise, discounts, gift cards and even cash. Card holders can cash in every 3,000 points for $25 in cash. Debit card holders will not lose any points already accumulated.
Pick Your Battles
USAA conducted a study of its members to see which services they wanted to keep if the bank could not afford to continue all of its programs. According to David Bohne, president of USAA bank, “We carefully considered all options and surveyed members when we began assessing the financial impact of the provision. USAA’s survey found that members favored free checking and ATM fee refunds over debit card rewards. Based on this feedback, we decided to stop the debit card rewards to maintain the other benefits.” The debit reward program will end September 1.
Sometimes, it is about picking your battles, and it seems that USAA listened to what its members had to say and made a sound decision for both its customers and its banking branch of the organization.