The battle over debit card fees got a little hotter this weekend as Chase bank sent letters to customers saying that starting in July, the bank will stop offering rewards points to people with debit cards. The move is prompted by the Durbin amendment, which aims to limit debt card fees.
“Congress recently enacted a new law known as the Durbin Amendment that significantly impacts debit cards,” the letter said, according to an American Banker writer who received a copy. “As a result of this law, we will be changing our debit rewards program.”
The Federal Reserve proposed rules that would lower debit card fees from their current average of 44 cents per transaction to a maximum of 12 cents. The new rates are scheduled to take effect April 21. Banks have unleashed a massive lobbying effort to strike down the rule, which they say will cost them billions of dollars in revenue a year.
Congress has responded with a number of different bills that could change or postpone the fee cap before it takes effect.
“It seems like they’re jumping the gun a little bit,” Gerri Detweiler, Credit.com’s credit expert, says of Chase’s decision to cure rewards programs now. “I think they run the risk of turning off some loyal rewards card users by acting so quickly and so aggressively before they know what the final rule is going to be.”
Existing Chase debit card customers will stop earning rewards points on April 19, two days before the Durbin amendment is scheduled to take effect, according to Chase’s letter.
[Credit Card Roundup: Rewards Cards—What’s Hiding in the Fine Print?]
Image: toffehoff, via Flickr.com
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