Banks will cut debit card benefits next

The nation’s largest banks have been cutting customer benefits. Next on the chopping block are debt card rewards. Debit card benefits will cease entirely in July at JP Morgan Chase, after not any longer offering enrollment in the program in Feb. banks have been scaling back on consumer benefits and upping fees, as the potential loss of revenue from interchange fees is looming over the banking industry. Source of article – Debit card rewards next on the chopping block at large banks by MoneyBlogNewz.

Banks contend they’ll be brought low with interchange fee cap

The biggest banks are stopping many customer rewards for instance free checking due to the possible interchange fees cap which would stop the fees a financial institution can charge for payment transitions on debit purchases. More than likely, debit card rewards won't last long. This is the next casualty Bloomberg predicts will occur. Leading the charge in cutting back on rewards for customers is Chase, which stopped offering enrollment into the debit card rewards program to new customers in Feb.. Chase will stop offering rewards altogether on July 19, though any reward points that have been accrued by that point will still be honored. Consumers may eventually need same day loans to use their own money.

Bigger fees to pay at ATMs

MSNBC reports that raising fees for ATMs is another thing that banks are doing because of reform law changes. Chase, the second largest bank in America, is currently testing $4 and $5 fees for consumers who use Chase machines that aren't Chase customers. The program is testing $4 fees in Texas and $5 fees in Illinois. All other states will retain the $3 fee for non-Chase consumers, which are above the $2.33 national average. The fee Chase has for consumers at non-customer ATMs is $1.41 above the national average. This $2 fee will stay the same. In the nation, the second largest ATM network belongs to Chase. TD Bank and Citi bank are following suit, and Wells Fargo and Bank of America are likely to not be far behind. The idea of Chase, Bank of America and Wells Fargo having to run for installment loans because legislation prevents them from gouging customers is not likely to cause many people discomfort, but there is a catch.

Issue occurs also for credit unions

Forbes explained that interchange fees are charged by all banks, whether they’re for-profit or not. This is why the Durbin Amendment to the Dodd Frank Act is opposed by credit union trade groups like the National Association of Federal Credit Unions. For-profit banks can manage a huge drop in revenue much better than community banks and credit unions. This change would go from the average of 44 cents per transaction with the Federal Reserve proposal to a maximum of 12 cents per transaction. The House of Representatives and Senate can be looking at the bills soon while the Durbin Amendment wouldn't be able to happen for two years to study what would occur.

Information from

Bloomberg

bloomberg.com/news/2011-03-21/jpmorgan-will-cease-debit-card-rewards-program-because-of-proposed-fee-cap.html

MSNBC

msnbc.msn.com/id/42130464/ns/business-your_retirement/

Forbes

blogs.forbes.com/moneybuilder/2011/03/03/the-durbin-amendments-effect-on-credit-unions/