Not long ago, award travelers had plenty of options for earning points and miles from both credit cards and rewards debit cards. However, debit options have become scarce, and the remaining debit rewards programs aren’t nearly as rewarding as they used to be. In this post, I’ll offer some insight into the changes within the banking industry that brought about the downfall of the rewards debit card, and cover the few options that still exist for those who can put them to good use.
The Durbin Amendment
Soon after the financial crisis of 2007-2010, the Obama administration asked for financial regulatory reform and large-scale changes, essentially directed at former “too big to fail” banks. From these solicitations emerged the Dodd-Frank Wall Street Reform and Consumer Protection Act. In the final days of the bill’s approval process, Senator Richard Durbin of Illinois added an amendment that would limit debit card interchange fees, which are the swipe fees charged by a card-issuing bank to an acquiring bank for the acceptance of card-based transactions. In essence, merchants are charged by card issuers for the privilege of being able to accept your debit card.