Bankrate.com’s senior financial analyst Greg McBride said that the Dodd-Frank’s Durbin Amendment, which is intended to reduce debit fee processing costs for merchants, has led some banking institutions to reduce debit card rewards and raise fees on usage, the International Business Times reports.
Credit card rewards programs, however, have managed to replace shrinking debit card programs. A Bankrate.com survey of 50 cash-back credit cards issued by 19 U.S. lenders shows that credit cards rewards programs are giving more cash back and getting rid of fees.
The survey also found that 48 percent of cash-back cards paid one percent cash back, up from 44 percent that did so last year, and, 14 percent of cash-back cards paid more than one percent cash back.
McBride said that credit card rewards programs have been heavily marketed over the past two years. Lenders generally target low-risk customers with these offers.
“Banks don’t have the appetite to put a lot of risk on the books,” McBride said, the International Business Times reports.
McBride added that banks will continue to acclimate to a changing economy through new and innovative rewards programs.
“There is intensive competition in that area because [banks] are targeting the consumer most in demand,” McBride said, the International Business Times reports.