Friday, September 16, 2011

Are Debit Cards Dead

The Credit CARD Act of 2009, as well as the Dodd-Frank Act Financial Reform Act and interchange and overdraft fee reform, have reduced revenue banks earned from the credit and debit cards consumers. Banks have responded by reducing or eliminating rewards programs and other perks and increasing ATM fees to $5 and increasing other bank fees.

Some reward cards program will be funded by retailers where you use your card instead of the banks. If frequently shop at specific businesses your bank may request that the retailer offer discounts.

This however can work against consumers because it will force consumers to spend more money to get fewer discounts. Retailer claims consumers will get more discounts and offers based on their shopping history. Consumers can still get rewards with airlines, hotels and credit cards.

Wells Fargo ended it's debit rewards card program and is currently testing a $3 monthly fee for debit card users in four states. Chase, SunTrust, Continental and United ended their debit card rewards program in July 2011. Free checking at some banks such as Bank of America will also be eliminated. TD Bank still offer debit cards.

Ally Bank offers a debit card reward program that puts cash into a consumer’s account. However, consumers do not earn points or miles with every purchase. The cash is used for making purchases through partner retailers.

Perk Street Financial offers an online checking account that provides rewards for any checkcard card credit transactions. You can earn 2% cash back if your balance is over $5,000 up to 90 days.

If your balance is under $5,000 after the 90 days introductory period, you will earn 1% rewards. The bank doesn’t charge monthly maintenance fees and offer 5% cash back with partner vendors which change each month. Use financial site like to comparison shop for debit card reward programs to find the best deal.

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