yfan wrote:I can name more than one bank with rewards debit cards. Discover Cashback checking (10 cents on every swipe, check, bill payment), and Bank of America debit cards - which are eligible for BankAmeriDeals cashback, which offer 10% or more cashback on specific purchases.
As much as there is cost of fraud, the changes to the rewards programs are due neither to the cost of fraud nor regulation. It's a result of the programs not making enough money. Banks are getting really good at detecting fraud and shutting down cards (and issuing new ones) before major damage. But the rewards program competition has caused too many people to get rewards cards just for the bonus, or the bonus categories (at least, more than the banks anticipated), and not use the cards otherwise. That means they have the loss leaders (sign up bonuses and bonus categories) but less of the benefit of having that card become the default card for the consumer. That's why we're seeing rewards nerfed.
I actually tried to open a checking account with Discover and was told they'd need to verify I was who I said I was (duh, I applied from a link they sent to my e-mail, the same e-mail addy I've had the whole time I've had my Discover It card. As for the BoA BankAmeriDeals, I used to use it, but the deals aren't nearly as good as they used to be.
I think a lot of the nerfing is because too many people are getting smart.The cards which have the highest credit criteria are the ones likely to get nerfed (PenFed, CSP, US Bank Cash+) simply because those with the best credit simply don't carry a balance and so the issuers don't get the desired interest which is their expected bread and butter. The "break even" for CC's seems to be 2% so without substantial interest income, a card issuer is losing money when they give an initial bonus and/or 2%+ rewards and the cardholder just gets his bonus, pays off the card and uses the card only for the targeted categories. Ironically, cards with a little lower credit customer (good to excellent credit) seem to be less likely to be nerfed. The Chase Freedom and Discover It are examples of those... people with those cards have a little lower average credit so enough of them have a recurring balance and from what I've seen where I work, people will use those cards even when it's not for 5% categories. The credit savvy customer gets the Freedom and IT, but so does the average Joe.