A week after the Federal Reserve released its final rules on the debit card regulation, USAA Bank announced that it will be ending its debit card reward program. However, USAA Bank will be keeping its free checking account along with its ATM fee refunds. USAA Bank posted the announcement on its website in this news release:
A new federal law will significantly reduce the revenue banks receive from merchants when consumers pay with a debit card. USAA Bank has always returned the majority of this revenue to its members in the form of benefits, such as free checking, ATM fee refunds and debit rewards.
As a result of the law, USAA Bank will end its debit card rewards program Sept. 1.
The new regulation caps the debit card interchange fees that retailers pay every time you use your debit card. The regulation exempts financial institutions with assets under $10 billion. USAA Bank has $48 billion in assets so the fee caps will directly affect them. The regulation takes effect on October 1st.
USAA Bank's debit card reward program wasn't that great, so I doubt it will be missed. It only offered 0.5% cash back. For those interested in cash back rebates, they will probably be using a credit card. Since the regulation only affects debit cards, USAA Bank will continue to offer credit card cash back rewards.
According to USAA Bank, they conducted a survey to decide what to cut:
USAA's survey found that members favored free checking and ATM fee refunds over debit card rewards. Based on this feedback, we decided to stop the debit card rewards to maintain the other benefits
It's nice to see USAA Bank will be keeping its free checking along with its ATM fee refund policy which refunds up to $15 in other banks' ATM usage fees each month. The checking account will remain a good deal. Other perks that come from the free checking include mobile banking apps and Easy Deposit which allows you to deposit checks at UPS Stores around the nation. They also offer a remote deposit service called Deposit@Home, but they are still restricting this to customers who qualify for their insurance products which requires a military connection.
Thanks to reader WhataBummer who first mentioned this news in the discussion forum.