It’s no secret major banks are dropping or curtailing their popular debit card rewards programs. But what happens to the cash, airline miles, points and whatnot that consumers have already earned by swiping a debit or check card?

Debit Cards

Ordinarily, those rewards won’t vanish, even if the program is terminated, according to George Albright, vice chairman of Speer & Associates, a financial services consulting firm in Alpharetta, Ga.

“We don’t see anybody taking accumulated points away,” Albright says. “In most cases, you’re allowed to redeem these points. It’s just that they’re not taking new enrollments. Over time, the points will peter out because nobody is getting any new ones.”

Two exceptions: If the checking account is closed, any unredeemed points likely will be gone while some points will be subject to expiration dates.

For example, at Wells Fargo, points are forfeited if the checking account is closed, points expire five years after the month in which they were earned and a minimum of 650 points is required to qualify for any rewards, according to bank spokeswoman Lisa Westermann.

Rewards credited

Airline miles and other perks redeemed through outside-the-bank providers generally are transferred to customers’ accounts on a regular basis. In keeping with that practice, banks are distributing these types of rewards and putting redemption in the customer’s hands, so to speak. Cash awards generally work in a similar fashion.

For example at JPMorgan Chase, cash-back rewards have been deposited into customers’ accounts, Continental Airlines and United Airlines miles have flowed into their airline mileage programs, and Ultimate Rewards points have been put into customers’ accounts to be redeemed through a Chase website, says Tom Kelly, a Chase spokesman in Chicago. Customers who’ve earned Disney rewards need to convert those points to a Disney debit card. Chase also refunded an annual program fee to some customers on a pro rata basis when the program ended.

Consumers whose rewards can be redeemed through an online shopping mall operated for the bank by a fulfillment company might wonder whether the offerings in those malls will shrink as the volume of reward points dwindles. Albright says anything is possible, but that outcome seems unlikely since credit card rewards usually are redeemed through the same malls, and those programs are still active.

“A bank that has a big credit card portfolio is going to maintain those relationships because there are a lot of credit card points out there, and (consumers) will continue to accumulate them,” he says. “That’s still a selling point for the credit card.”

That said, individual merchants might exit particular debit card rewards programs, making those goods or services no longer an option. For that reason and to avoid the risk of forgetfulness, consumers are advised to utilize points sooner rather than later.

Free checking, sans rewards

Some banks still offer debit card rewards but typically not on free checking accounts. The reverse is also true. Free checking accounts still can be found but typically not with debit card rewards.

Even without rewards, a debit or check card still can be used to access an ATM or make a purchase in person or online, offering greater convenience than cash or a paper check. What has changed is not so much the card itself as the “value proposition” of that card for the bank, consumer and merchant, Albright says.

“We’re seeing a retrenchment in the card being the lead product. The checking account now becomes the lead product,” he says. “If (consumers) want a debit card, they can have a debit card. It’s just going to be an access vehicle for the checking account.”

The overall relationship between the bank and customer also comes into play as debit reward programs come to an end, Albright says. Generally, banks tend to offer wealthier customers greater access to a wider variety of fee waivers, rewards and other perks, based on their higher utilization of a bank’s products and services.

For example at PNC Bank, customers can choose a checking account with no monthly service charge, no minimum balance requirement and no debit card rewards, or they can pick a checking account with rewards and a monthly fee that is waived if certain activity or balance requirements are met, according to PNC. The idea, from the bank’s point of view, is to keep customers who need only a basic checking account while encouraging them to expand their banking relationship and transition to a higher-value account.

Banks also have stepped up their promotions of credit cards that offer rewards. Consumers who pay off the balance every month stand to gain. Those who carry a balance should remember that any use of that credit card racks up interest charges as well as rewards.

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