Banks Cut Debit Card Incentives
Major U.S. banks are dropping debit card rewards in response to the Federal Reserve's move against swipe fees charged to retailers.
Many financial institutions already have increased ATM fees and are threatening to limit debit card spending in response to the Fed's proposed cap, saying they must find revenue elsewhere, CNNMoney reports.
Wells Fargo, which also owns Wachovia, announced Friday it will no longer offer its debit rewards program for new customers.
JPMorgan Chase notified existing customers last week they will lose their debit rewards in July, having dropped them for new customers in February. SunTrust will stop giving award points April 15.
Citi said it is "in the process of evaluating potential changes to our rewards programs."
Debit rewards are awarded for activities such as spending, carrying high balances and making minimum deposits. Customers can redeem the points they collect for cash or gift cards.
Curtis Arnold, founder of CreditRatings.com, said banks "risk losing customers and won't have the same customer loyalty."
"Maybe what they're hoping will happen is there will be a consumer backlash that results in changes to the regulation, so that scrapping debit rewards can just be a temporary thing," he added.