Wells Fargo Halts Enrollment In Debit Rewards, Citing Battle Over Interchange Fees

Another bank is ending its debit rewards program. Wells Fargo says it will stop enrolling new customers in its debit card rewards program as of April 15. The San Francisco-based bank says customers who are already enrolled in the program will continue to earn rewards for now.

Background

Wells Fargo says the change is the result of a pending new regulation that is expected to dramatically limit the fees banks can collect from merchants whenever customers swipe their cards.

The cap on fees was mandated last year under the financial overhaul known as the Dodd-Frank Act. The current proposal would cap fees at 12 cents per transaction, versus the current 1 percent to 2 percent of the transaction amount.

The banking industry says the change could slash its debit swipe fee revenue by as much as 90 percent.

A final rule is expected from the Federal Reserve by April 21, unless Congress delays the deadline.

The rule will take effect three months later.

Other Banks

Chase notified customers this month that they will no longer be able to earn points with their debit cards after July 19. The bank had already closed off enrollment in the rewards program to new customers as of Feb. 8.

PNC Bank, based in Pittsburgh, also notified customers this month that it will no longer give customers with free checking accounts reward points for debit card purchases as of Sept. 12.

Comments

[MosesDidItBest]

11:48 PM on 03/31/2011

delayed*

[MosesDidItBest]

11:48 PM on 03/31/2011

Whether you use cash, debit or credit card, it doesn't matter. Retailers hike their prices up to offset the charges the banks make against them for card use.

The bank profits from little to no work or product involved are enormous. This bill will cut those profits by 14 billion dollars. So it pays them to lobby and spend millions to get this thrown out of delated.

[MosesDidItBest]

11:43 PM on 03/31/2011

Just like Chase, I'm betting Wells Fargo did not disclose that this bill would save consumers 14 billion a year. Bite it Wells Fargo.

[LLNYRN]

11:37 AM on 03/29/2011

Well Fargo has started making a major PR push in New York because of their Wachovia acquisition. I've been telling people to stay away from them.

I dealt with Wells Fargo when I lived on the West Coast for a number of years. They had just acquire First Interstate, one of the WORST banks I ever dealt with. What many of my Oregonian friends referred to as "First Intercourse. So the service got more confusing and worse.

When I got my tech job in Publishing, the company had a credit union option to its employees. You best believe I got my money out of Wells Fargo as fast as possible.

[sensimilla]

05:49 PM on 03/29/2011

first interstate, i remember their suckiness well!

[mbondr1]

11:23 AM on 03/29/2011

Banks are for chumps. Use a credit union fools!

[Stewart Goss]

03:08 PM on 03/30/2011

Credit unions operate under special tax payer subsidized rules.

If I use a bank and you use a credit union, I am paying your way.

[Ophie511]

10:48 AM on 03/29/2011

One of my favorite billboards here in Minneapolis says "No, you're not paranoid. Your bank really is out to get you."

[frank day]

11:38 AM on 03/29/2011

Thats awesome!

Who pays for the billboard?

[Michael Ludin]

10:22 AM on 03/29/2011

it's is all, has always been, and always will be a scam. I run non-profit and was charged $4 for depositing 72 bills totaling $5000 or so, 22 over my monthly allowance. What is really messed up is the teller didn't even count it, he put it in a machine -- it was the quickest deposit ever made.

[Grannyover70]

06:42 AM on 03/29/2011

The banks did not pay these rewards anyhow. If you have an Awards Card they just
charged the Business where the goods were purchased more. So, I guess you would
say the rewards come from the business you purchased the item from, even from the
very small amounts you charged. This change in the law is a good thing. These
rewards were a burden on businesses whose profit margins can be very small in the
first place. Remember one thing, banks are in business to maximize their profits,
no matter what they have to do. They are creating new fees to replace the ones they can
no longer charge.

For instance, my sister has direct deposit for monthly salary. Her bank would transfer
money to her Savings Account each month from that deposit. Now they want to charge her a transfer fee of $24. I suggested she just get the money from the ITM and deposit it herself, OR
she could try to find a new bank. The one good thing banks are good for is their
ingenious ways of sniffing out new charges for you.
each month for doing this

[NW]

08:55 PM on 03/28/2011

Wells fargo is one of the biggest rip offs I have seen in a long time. I have a checking account them, I decided one day it would be good to split up my personal expenses from my regular bills by having two checking accounts, so I talked to the rep who gladly set me up with the account not telling me I needed a savings account, so one my next statement I find I am being billed for account fees for having that checking account, I call and find out what the problem is an they gladly reverse the charges and open up two savings accounts one for the primary and one for the secondary, Next month I get my statement and find I am being billed for account maintenance on the savings account at 3 dollars an account, now this may not seem like much to some people with a disposable income but all of my pennies count, so I called up these people again and find out I was supposed to have auto deduction into the savings accounts every month to the tune of 85 dollars each, which is fine for saving money but the point to all of this is the people dont' have a clue about there accounts and are willing to nickel and dime you to death, I got rid of all accounts after that I had had enough!

[frank day]

11:37 AM on 03/29/2011

Well Fargo was glad to see you go.

They want the big accounts that they can churn for fees.

[rMatey]

07:37 PM on 03/28/2011

The Banks - "We're the robbers now."

[Mister Grumpy]

06:15 PM on 03/28/2011

Why would anyone want to enroll in a reward program anyway?........... the gifts are all cheap chinese knockoffs...............

[frank day]

04:02 PM on 03/28/2011

Switch to using cash whenever you can.

You'll save way more than any paltry 'reward' from a megabank.

[roudy]

05:46 PM on 03/28/2011

The problem of course is that we cash customers are actually paying that card fee amount in each purchase. but at least the extra we end of paying stays with the merchant rather than being passed on to the banksters.

[DiscountWithCash]

08:11 PM on 03/28/2011

Couldn't agree more. This is why we always advise people to ask for a discount with they pay cash. Believe it or not, a lot of merchants provide the discount. And it's completely legal to do so, contrary to popular belief.

[Stewart Goss]

03:09 PM on 03/30/2011

Really? I've earned over $200 on one credit card alone to spend on whatever I like because I don't use cash.

[brklynivn]

03:11 PM on 03/28/2011

Well there's no reason to stay with the big banks then.

[comicpro]

02:55 PM on 03/28/2011

Earning points with your debut card......I cant be more excited. Banks whenever they enact any kind of "rewards program" usually are only rewarding themselves. If you have not gotten out of these banks like Wells,Citi and Chase you deserve the beating they are going to inflict with these changes in the process!

[roudy]

05:46 PM on 03/28/2011

The beatings will continue until the morale improves.

[DevonTexas]

02:47 PM on 03/28/2011

They borrow from the Fed at less than 1 percent, loan to us at 18 to 20 percent and then claim they aren't getting enough return on fees?!!

[iskra]

04:07 PM on 03/29/2011

Well in truth that's not how it works. 

Even if you got funds at 1% if you had 15% of your customers defaulting on the money you loaned them the minimum you could charge would be 16% and that wouldn't include servicing costs nor any profit.