Debit cards can be safer than credit cards because the charge is deducted directly and immediately out of your bank account; if you don't have the money, you can't buy the item. Great concept! Debit cards have been giving rewards, just like credit cards; however, that's about to change.
Due to new banking regulations that limit the fee banks charge merchants for each transaction on a debit card, also known as an intercharge fee is 12 cents. The amount banks were collecting was 44 cents, which means bank revenues will be reduced...substantially.
What Is A Bank To Do?
So, you're worried that banks won't earn a lot of money? Never fear. Banks will compensate by increasing fees on checking accounts, increasing the fees on ATM withdrawals and will be ravaging the rewards on debit card charges, if not eliminating them altogether.
Since banks can no longer fund rewards through the interbank charges and are thinking about getting rid of them, they may start partnering with retailers and create "merchant funded" reward programs. Many retailers are thinking of teaming with banks to create these lucrative programs.
What Should I Do?
As a remedy, you may be thinking, I'll just change banks. Well, there may be local banks that will still honor debit card rewards, but don't move so swifly, especially if you have many services tied to your checking account. Services like automatic deposit, automatic withdrawal, and on line bill paying. What a hassle to change.
Have you heard any rumblings from your bank about taking rewars away from your debit card? Which bank do you use? We'd love to hear from you.