With the looming Durbin amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act that would limit debit card swipe fees, numerous banks had planned to discontinue their debit reward programs. Initially the new rule was scheduled to take effect on April 21. With the federal government’s recent decision to delay the law, banks such as Chase have changed their minds yet again until a final decision is made.
The Durbin Amendment
The federal government seeks to limit the interchange fees banks can impose on merchants for the use of debit cards by more than 70%. With this law, banks will only be allowed to charge 7 to 12 cents at most per transaction.
Banks Cancel Debit Rewards
Earlier in 2011, Chase Bank announced plans to cancel its debit card rewards program for new customers, as the program was mainly funded by interchange fees. According to The Consumerist, Chase even sent out letters to customers in late March announcing the cancellation of debit card rewards and explained that the decision was solely based on the Durbin amendment. Chase wasn’t the only bank rethinking its debit card rewards program. Wells Fargo and SunTrust also announced in March plans to discontinue debit reward programs.
Banks Give Back Again
When the federal government postponed the rule on April 21, these banks agreed to keep debit reward programs until the law takes effect. The rule is now planned to take effect on July 21. Until then, Chase has agreed to waive monthly checking account service fees for cardholders who actively use their debit cards and are enrolled in the debit rewards program. Wells Fargo is also following Chase in its decision to prolong debit rewards program, at least until the rule is finalized.