To reduce losses from a proposed federal cap on interchange fees, JPMorgan Chase is ending its debit card rewards program for most customers on July 19, according to an article by Bloomberg.
Chase customers will continue to earn debit rewards through July 19 and any rewards points accrued through that date will not expire, according to Bloomberg.
In a letter sent to customers, Chase explained that it was making changes to its debit rewards program because of the Durbin Amendment, Bloomberg reports.
The Durbin Amendment is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This amendment directs the Federal Reserve to issue rules ensuring that debit interchange fees that merchants pay to banks when consumers make purchases with debit cards are "reasonable and proportional" to the processing costs incurred.
In December, the Federal Reserve proposed new rules that could limit debit interchange fees from 7 cents to 12 cents per transaction. The proposed cap would reduce the maximum interchange fee that an issuer receives for a debit card purchase by more than 70 percent compared to the 2009 average, according to a press release from the Federal Reserve.
The proposed rules apply to issuers that have assets of $10 billion or more. The rules would take effect on July 21, 2011.
Congressional bills proposed last week seek to delay the upcoming cap on interchange fees by one or two years.
To make up for the anticipated decline in income from a cap on interchange fees, banks are adding checking account fees and limiting debit card rewards.
Earlier this month, JP Morgan Chase said it was considering limiting the size of purchases allowed on its debit cards to $50 to $100.