Due to recent legislative moves by the Federal Reserve, debit card rewards could soon disappear for customers of major banks.
This is because larger banks are now facing a cap of 12 cents on debit card transactions rather than 1 percent of the purchase amount, a move that could cost them millions in revenue.
“Debit rewards are going to be extinct for big banks,” Craig Maurer, an equity research analyst at CLSA, told Bloomberg. “And if they somehow stay around, it will only be with significant changes.”
However, those who want to continue gaining debit card rewards may want to open an account with smaller banks, as they are exempt from the new caps, Bloomberg reports. Most of these institutions will likely still be able to offer points for debit rewards card customers, helping consumers get cash back, free gift cards and other merchandise.
Debit use surged in 2010, as many consumers opted to use their checking accounts less frequently, or were pushed out of the credit card system altogether due to charge offs by major lenders.