By now you might have heard the news that JPMorgan Chase will stop offering debit-card rewards for most of its customers July 19. Chase isn't the first bank to make this move (PNC Bank and U.S. Bancorp beat it to the punch), and it likely won't be the last. "I think there will be others to follow," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.
The elimination of debit-rewards programs is a preemptive strike by these banks to compensate for the potential loss of revenue from debit fees. Banks have used debit rewards programs to entice customers to use their cards, which generate revenue for banks every time cardholders swipe them. Merchants pay banks an interchange fee of 1% to 2% of the purchase price for each debit transaction. But the Federal Reserve has proposed capping that fee at 12 cents a transaction. It has until April 21 to rule on the proposal before enacting it July 21.
Debit-card rewards usually aren't as generous as credit-card rewards. But if that's what drew you to Chase, U.S. Bancorp or PNC (which had one of the best debit-rewards programs), you might want to consider shopping around for another account with perks. But Hardekopf suggests waiting until after the Fed's April 21 deadline to see what cap it decides to enact and to see how banks react.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
On the bright side, lower debit fees may mean merchants will start offering discounts to customers who use debit cards.
But what about those proposals by Chase and Bank of America to cap debit purchases at $50 to $100? Hardekopf says it's likely just a political move to get the Fed to make the cap on interchange fees higher than the proposed 12 cents. He doesn't expect limits on debit purchases to become a reality.
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
Embracing Generative AI for Financial SuccessGenerative AI has the potential to reshape how we approach learning about and managing our personal finances.
-
Five Ways to Save on Vacation Rental PropertiesTravel Use these strategies to pay less for an apartment, condo or house when you travel.
-
How to Avoid Annoying Hotel Fees: Per Person, Parking and MoreTravel Here's how to avoid extra charges and make sure you don't get stuck paying for amenities that you don't use.
-
How to Appeal an Unexpected Medical Billhealth insurance You may receive a bill because your insurance company denied a claim—but that doesn’t mean you have to pay it.
-
Amazon Prime Fees Are Rising. Here’s How to Cancel Your Amazon Prime MembershipAmazon Prime Amazon Prime will soon cost $139 a year, $180 for those who pay monthly. If you’re a subscriber, maybe it’s time to rethink your relationship. Here’s a step-by-step guide to canceling Prime.
-
How to Haggle for Almost AnythingSmart Buying Learning how to haggle is an invaluable skill. These strategies will help you negotiate a better price for just about any product or service.
-
Disability Insurance Can Provide COVID CoverageCoronavirus and Your Money If you are concerned about long-term complications from COVID-19, consider disability insurance coverage.
-
21 Things You Can't Return to Amazon — Either Online or In-StoreDid you know there are things you can't return to Amazon? Before tossing these items into your shopping cart, be sure to read Amazon's return policy first.
-
How to Avoid a Charity Scampersonal finance Scammers never quit, even when you're trying to be altruistic. But you can avoid getting duped if you do your homework.
