[Update June 9th, 2011: Now that Jon Tester’s challenge to the Durbin Amendment failed, Chase will end its debit rewards program as planned.]
Remember how Chase said they’d stop their debit rewards program because of the Durbin Amendment? In March, they began telling their customers that debit accounts, which would become far less profitable, would stop accruing rewards come July. Well, now that interchange fee regulation is on the rocks, Chase is thinking about bringing rewards checking back.
The bank pinned the death of debit rewards on swipe fee regulation. “Congress recently enacted a new law known as the Durbin Amendment that significantly impacts debit cards. As a result of this law, we will be changing our debit rewards program,” it said in a letter to rewards checking customers announcing the program’s cancellation.
Interchange regulation gets off track
But the law hit a snag: last week, Chairman of the Federal Reserve Ben Bernanke told Congress that he wouldn’t be able to make the deadline for announcing the regulations. The Federal Reserve’s delay is widely seen as a victory for banks opposed to interchange fee regulation.
Chase certainly believes they’ve been granted a stay of swipe fee execution. They’ll continue their rewards program though July, and will waive newly levied monthly fees on some checking accounts. And like they did when they announced the end of the rewards program, they made clear the cause-and-effect relationship.
“Chase had to make changes to the benefits we extend to customers due to the pending economic impact of the Durbin Amendment. If Congress delays the implementation of the new law…we will waive the service fee and continue the popular debit rewards benefit while they do so,” a Chase employee confirmed.
Chase to Congress: the future of rewards rests on you
Ben Bernanke reiterated his commitment to the July 21st implementation deadline, but members of both houses of Congress, and on both sides of the aisle, now voice their concerns.
Senator Jon Tester (R-Montana) introduced a bill delaying the Durbin Amendment by two years. Representative Shelley Moore Capito, (R-West Virginia), introduced the House version with a one-year delay.
Even Congressman Barney Frank, Democrat of Massachusetts and ranking member of the House Financial Services Committee, announced plans to revise the law.
Chase implored Congress to stall the Durbin Amendment, joining credit unions and banks both large and small in a full-out lobbying barrage. It made perfectly clear that interchange regulation means no debit rewards for consumers. However, should the law be revoked, debit rewards will come back.
“We don’t want to make the changes…but we have to as a result of the economic impact of the law. If the regulations are delayed, we wouldn’t make the changes,” said Ryan McInerney, JPMorgan Chase’s VP of Consumer Banking.
“We will continue debit rewards if the regulation is delayed,” affirmed Chase spokesman Thomas Kelly.
Rewards checking at other banks
Wells Fargo and SunTrust, who joined Chase in scuttling their debit rewards programs, have not announced any plans to resurrect them. Wells Fargo will continue with plans to end rewards checking, and reassess once the rules have been finalized. Pittsburg-based PNC Bank also killed its debit rewards for free checking last month.
Rewards checking is still there for the taking. PerkStreet Financial’s Debit MasterCard gives out 1%+ in rewards if you don’t enter your PIN.
A number of credit unions, too, offer rewards checking. Lake Michigan Credit Union offers 3% APY on its high-yield checking account, and despite the name, anyone in the United States can join with a donation to the West Michigan chapter of the ALS Association.
So, Durbin or no Durbin, rewards checking is still out there. It just takes a little longer to find.