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Chase Eliminating Debit Card Rewards

This article was written by in Credit. 17 comments.


JP Morgan Chase Bank is not done changing its programs in apparent response to new regulations against fees. The large bank is increasing ATM fees to $5 for non-customers and considering limiting debit card transactions to $50 or $100. Now, Bloomberg News is reporting that they are eliminating their debit card rewards program.

Debit card proponents often cite debit card rewards programs as a legitimate alternative to credit card rewards programs. Unfortunately, debit card rewards programs were never quite as valuable as their counterparts. As Chase goes, so will go the rest of the industry.

Do you believe consumers deserve rewards programs? I believe that it’s unfortunate when an existing benefit is taken away, but credit and debit card users should not continue to expect these types of benefits. When companies feel pressured to increase profits, which many will when they believe their revenue will be reduced due to increased regulation, some of the benefits we’ve grown accustomed to will disappear. There could easily be a world in which all credit cards have annual fees, all banking products have maintenance fees, and any sort of service could trigger a cost. While we’ve grown to accept the idea of free — free content online, free banking products, free credit cards with rewards programs, free parking, etc. — it might be worthwhile to adjust our expectations.

There are valid arguments for certain products and services that should remain free. For example, there’s a theory that if content, like a television show, is supported by advertising, the consumer shouldn’t have to provide an alternate income stream. The sponsors should cover the cost of production and distributions. Nevertheless, it’s more common to pay for content and still be subject to advertising.

Do you mourn the disappearance of debit card rewards programs and other services or benefits?

Bloomberg

Published or updated March 21, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 17 comments… read them below or add one }

avatar Brandon

I saw on the other post that people were up in arms about the $50/$100 debit transaction limit, but the more I think about it, the more I wonder if it truly is a big deal… for consumers. It talks of limiting debit transactions. In my mind, that means when you select debit and enter your PIN. I usually do this because I have heard it is cheaper for merchants, but with few exceptions (and to my knowledge none of them at Chase Bank), a debit card can be run as credit, typically through Visa or Mastercard. The money is still taken from your account but (in my bank at least) it is posted days later instead of nearly instantly and the merchant has to pay the Visa/MC fees (usually like 3% of the transaction cost) instead of the debit fee (usually a flat fee).

Again, there could be some misinformation there, but long story short, I don’t think you are going to have to split your groceries into multiple transactions.

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avatar cubiclegeoff ♦896 (Dime)

The rewards never seemed to be enough to really care about, so the change won’t bother me. I’ve always focused on reward credit cards as being the most lucrative.

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avatar rewards ♦31 (Newbie)

“Do you believe consumers deserve rewards programs?”

Customers don’t deserve anything. If customers don’t like the service, customers go elsewhere. I’ve never seen a compelling advantage to use a debit card over a credit card.

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avatar SteveDH

I don’t really care about the rewards but the service is certainly headed south. I just got done playing whack-a-mole with Wachovia bank on an account for my Mom. It started several months ago when they announced a fee for using Quicken so I shut that off. Next came a fee for check image statements and I turned that off. The last straw was a $14.00 monthly fee just for having a rarely used account under $5,000 so we closed the account altogether. Imagine charging a 90 year old $14 a month just to have a checking account with you. When confronted by that 90 year-old blind women they closed the account – adding the 14 bucks back into the cashier’s check they gave her. Big of ‘em – huh? Chase isn’t the only one!!!!

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avatar Ceecee ♦53 (Newbie)

I prefer a credit card for the security factor. Banks may be shooting themselves in the feet. People like me will cut up the card when it becomes too expensive, and check out the local banks and credit unions. People need to have a backbone and take their business elsewhere. Cash is looking better all the time—-will they be putting a fee on that?

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avatar tigernicole86 ♦55 (Newbie)

I have to agree. And I’ve found that local credit unions off really nice rates for credit cards, even if you don’t have the best credit(I have good credit and Citi just raised my rate again). I’ve left Chase because I saw how the winds were changing and I went with a local bank. Now I get rewards and I find out from them what changes are happening as opposed to finding out in the news.

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avatar Sean Hills

Glad I’ve done business with my credit union over these banks. I think more people should do the same.

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avatar John L

I totally agree. I have no idea why it took me so long to move away from Wells Fargo and to a local credit union. Way, *way* better service, better account features, and at much fairer rates/prices.

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avatar krantcents

A rewards program to use a debit card would not make me use it. If they limit use of the card, people will use cash, check, or credit card. Maybe that is what they are trying to do!

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avatar Paula @ AffordAnything.org

I agree with KrantCents — if they limit both rewards and transactions on a debit card, more people will switch to credit cards. I advise people never to use a debit card; if an erroneous transaction comes up, it’s easier to challenge it with a credit card. Plus the rewards are better with CCs.

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avatar skylog ♦368 (Nickel)

i agree with you on both of your points. i have also preached to my circle about using credit cards for the security reason and there are so very few times when my debit reward is anywhere near as good as i can get from my credit card.

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avatar TakeitEZ ♦549 (Dime)

There are many people (I am one) that have destroyed their credit in the past and are still attempting to repair the credit wreck. These people might not be able to get a credit card at this time so their debit card is vital especially if they don’t like to carry cash everywhere with them.

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avatar 20andengaged ♦367 (Nickel)

It sucks to hear about that, especially being a Chase customer :(

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avatar skylog ♦368 (Nickel)

well, we all knew this was the next step. i will try to swing it to another angle. it is great that several nasty aspects of the banks procedures were put in check, but one by one, the consumer is getting hit in some other way. my bank debit card reward plan is average at best, and it usually only results in a few dollars a month, but it is just the idea of losing it that bothers me more than the reward itself.

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avatar woodsconsin81

My only concern with removing reward programs for debit cards, and encouraging credit card reward programs is that your incentizing people to use credit cards and increase their debt. Wasn’t this the very thing that got us into the financial crises was too much debt load and people spending beyond their means (corporations included). If anything, remove the incentives for credit card usage, and then if they have to pass the cost of transactions onto consumers via a debit card transaction fee, then so be it. At least they’re only spending what’s in their bank account, as opposed to spending money that they don’t have.

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avatar karmen

I for one, loved the Disney rewards program Chase had. Just by using my debit card to pay my bills, for household items, gas, fast food, etc. (which I do anyway, because I never carry cash), I earned enough rewards (in a little under a year) to purchase $500 in Disney gift cards to use on our recent trip to Disneyland.. we also recieved a 10% disc. at participating restraunts in Disney, got a 10% disc. on merchandise and tour purchases, and FREE magic morning tickets/tickets for Aladdin the Musical/tickets for Mickey’s toontown Morning Madness/Parade preferred seating for Chase cardholders/pin, lanyard & backback, and we got to get our picture taken with different characters every day at California Adventure’s Hollywodd Studios backlot at a special Chase cardholders area (free 5×7 included). I was accumulating rewards again, to use when we go back in another two years, so now that it’s being discontinued, it kinda sucks.

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avatar Susan

I too, currently have a Chase account and I also have the debit card rewards program. I agree with “Woodsconsin81″, in that the point behind using a debit card versus a credit card is to spend only what you have versus racking up a large credit card bill you cannot pay. While a lot of credit cards offer the 0 interest for 12 months ploy, you are still taking a chance that IF something happens in that time span (i.e. you lose your job…medical issues…etc) and lets face it, in today’s economy it most certainly CAN happen, then you are racking up debt you can’t pay. I do have credit cards but I rarely use them, other than occasionally for small things to just pay off immediately to keep the accounts going and in good standing. They are for emergency use, but unfortunately, emergencies arise far more often than we expect! I would rather lose my debit card rewards and keep my debit card WITHOUT its limits, than to switch to credit cards. And I actually receive a fair amount back with my rewards. Usually about $20 a month. But, hey..it was free money! So, even though it sucks that I am losing it (and I AM less than thrilled), I can understand why Chase is doing it. But, I cannot condone the limits on debit card transactions.Banks encourage their customers to use their debit cards as Visa/Mastercard (more points or rewards that way), so as to make more money, while stores DO prefer the debit option as it saves THEM money. At Dollar General, if you have Master Card, you HAVE to use debit. I can see imposing a fee if customers use too many debit transactions (I do know a few banks that do this) but limiting the amount of the transaction?? COME ON! But on the flip side, the retailers will then start charging for using CREDIT CARD! Its a lose-lose situation. And I know a lot of people stated they prefer Credit Unions. I would have to agree they are much better choices. However, prior to opening my account with Chase (because I have a car loan with them) I had an account with PNC. Still do. I have been with them over 5 years and NOT ONLY is the customer service better, they DO offer a “points” program (which they have yet to take away) and although it gives less than Chase’s cash back does, the bank itself is a better bank. I was with National City before PNC bought them out and although I was nervous at first at the thought of a new bank. I was pleasantly surprised. Not too mention, they are ranked as one of the top banks. I have never had one issue with PNC OR their Customer Service, nor have they EVER tried to “limit” my transactions. My stepmother banks through a credit union and when we went to NYC on vacation, she had a daily limit (which we all do) on her card of like $400. She is a nurse and probably makes WAY more than me every year but she couldn’t spend more than $400 a day on food, gas, gifts, etc. She was forced to used her Credit card when she hit her limit. I, on the other hand, have like a $1500 limit with PNC and have never had to call them to lift it, as that is plenty for me! Bottom line, each bank has its pros and cons, even Credit Unions. But, as one person above stated, even though the idea behind the new bank regulations was a good one, its still the consumer that will pay the ultimate price in loss of profits for the banks.

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