Are Debit Card Miles an Endangered Frequent Flyer Perk?

Earning OnePass miles for using a Continental debit card issued by Chase? Enjoy it while you can.

According to Chase's website, your mileage-earning days are numbered:

"Congress recently enacted a new law known as the Durbin Amendment that significantly impacts debit cards. As a result of this law, Chase will be changing the Chase Continental Airlines Debit Card program.

"After July 12, 2011, cardholders will no longer earn Continental OnePass miles when using the Chase Continental Airlines Debit Card. All OnePass miles you earn with your debit card until July 12, 2011 will be automatically deposited directly into your Continental OnePass account."

The Durbin Amendment, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, limits the swipe fees banks may charge customers for debit card transactions. When the amendment takes effect, on April 22, it will make debit cards less profitable for the banks, which in turn will make it uneconomical for them to market the cards with frequent flyer miles, a significant marketing expense for the cards' issuers.

But news of debit card miles' death may be premature.

The amendment has sparked a battle royal between small businesses—which are in favor of the legislation—and Fortune 500 companies—the banks, credit card issuers, and their supporters that have mounted a concerted effort to have the amendment repealed on constitutional grounds.

The Wall Street Journal (subscription required to read the full article) recently editorialized against the amendment, warning that it "threatens the flow of credit to low-income Americans and promises higher fees on bank services for nearly everyone else."

Senator Durbin's response to the Journal's editorial is here.

More to the point, legislatively, nine senators have introduced a bill that would delay the regulation's effect date by two years, potentially derailing it indefinitely.

It's unclear to me what the net effect of the Durbin Amendment would be. While a reduction in debit card fees would seem to be a plus for consumers, the card issuers could simply charge more and higher fees for other services.

For OnePass members, certainly, losing the ability to earn miles when using the Continental debit card is a definite negative. And that could be just the beginning.

Among the other largest airlines, United has already discontinued its debit card (issued by Chase), but American (Citibank), Delta (SunTrust), and US Airways (Bank of America) still offer them. So there's still plenty of potential disruption to come if other issuers follow Chase's lead and strip their cards of their mileage-earning feature.

For now, for airline debit card-holders, it's wait-and-watch. And rack up your frequent flyer miles while you can.

Reader Reality Check

Do you earn miles with an airline-affiliated debit card?

Any opinions on the Durbin Amendment?

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Comments

[Juan]

If this happens I'm moving from Chase to Citi for the American miles. I don't want to have to use my credit card with chase to get the miles.

[Suzanne]

I'm heartbroken. I use my debit card for everything (cash? what's that?). And, by the way, they've been great about protecting me from fraud: a couple of times over the years my card has been double-swiped in restaurants, once someone stole the number and bought stuff on the internet - Chase intervened and refunded the lost money to me instantly, and gave me a new card the same day.

And I've gotten wonderful free trips out of all the miles.

The OnePass miles are a big reason I've stayed loyal to Chase for so long. I don't feel like having to switch.

[pete]

This is very confusing and I'm just fine with the agreement that we have with Chase. I use the debit card as a credit card for purchases, they charge about 2% to the retailer for the transaction AND charge me $60 per year. In turn I get air-miles. Notice to all the socialists in government, please stay out of our business! This legislation is NOT protecting me. Actually, it will cost the banks because I'm going to go back to writing checks and using cash when able and I'll only use the card if needed. And they're screwing me out of miles! In fact, the airlines get money money from Chase! Doesn't this also hurt the "struggling" airline industry's bottom line? If it weren't for reward travel, there are some trips that my family and I wouldn't take. Please change this stupid provision in an over-reaching law!

[DeDe]

Start paying cash??
Who looks after you then; lose your wallet, you lose; lousy product you lose. No record; you lose. Trips to the bank, you lose.
There is a lot to be said for the cash-less society.

[kathy]

Hate the thought of having to use my chase credit card to earn the miles ...thought the whole mindset these days is lowering credit card debt but now what ? hope it doesn't happen
Does anyone know of another debit card that gives 1/1 miles preferably on continental ? ...don't think it exists since I've been looking all over the internet

[don]

Understand to a point where you are coming from. But banking practices in this country IMO leave much to be desired.I would be more receptive to widespread fees if they managed the rest of their business/lending practices better. Have a week to let me expand? :) Staying on topic
I am well aware of the difference between a debit and a credit card. I am making a comparison nothing more of two different banking products. The banks do not have to wait at all for their money with a debit card make their fees off merchants and consumers just like credit cards. No problem with that when it’s in reason. That said like many banking practices it wasn't all that reasonable and that was reasonably demonstrated by the lion’s share of their customers and those who reviewed such policies in congress.
Like the health care policy there may be some holes in the policy and the bill may have to be reworked should they eventually get it right or a better balance.
I will be dumping my debit card shortly and will never look back.I took the card only for the promotional aspects. I don't see other banks following suit as of yet........
So it doesn't look like for today consumers are losing choice in the marketplace at all. Debit cards at most banks currently still remain though at Chase soon without rewards.
Because banks took advantage of customers and merchants to some degree is why these laws were passed to protect consumers in the first place. If one doesn't agree with their assessment and corrective action perhaps when the new bill that’s being floated around congress to postpone the bill to re-examine the policy (should it be passed) may make some happier. Perhaps then banks can return to their former business practices that perhaps some see as fair. All in the eyes of the beholder. No one said our government is perfect. However having traveled extensively and seen other governments in action I think the one we have is still a pretty good at least in my eyes regulations, imperfections and all.
Cheers

[Frank P]

Do you really understand what a debit card is? it is not a credit card, so, yes, you don't get revolving credit. It's for the convenience of not having to carry cash or checks.

Convenience costs money..ever try to buy soap or paper towels at a 7-11?

I don't carry credit cards and i use my debit card for everything. While I may not be happy with bank fees, no one is forcing me to use a bank. Banks are in the business of what? MAKING MONEY! Since when does the Fed Govt have the power to tell a company how much they can earn? You'd be singing a different tune if you owned a small bank somewhere and had to kowtow to all the stupid regulations the Govt throws at you.
remember this is a FREE country..that means you are FREE to NOT use a bank, or shop at a store or use your car. But if you do, they all come with government interference.

[don]

I took a debit card because of a sign up bonus.Banks pushed them down our throats for years as they were profitable.I think they are awful.You dont get weeks to pay interest free or revolve debt if you want to.
You have no dispute ability if a merchant wrongs you.The banks made more money as they simply take the money directly out of your account and fee you too death if anything goes wrong in their terms and conditions.And there is a huge security risk if losing one with a large account balance.
Good riddance to debit cards.If banks shut them down they lose in the end.If they attack their mileage earning credit cards programs thats a different story. I would start paying cash happily for almost all other purchases where a a warranty wasn't involved.
Debit cards.... what was the consumer beneft in the first place?I never got it...........
Maybe someone with bad credit who couldn't get a credit card?Someone who hates credit cards and would rather pay with a check so instead uses a debit card?
In the end IMO this is the banks way of showing the government who is boss by their attempt to protect consumers with their new laws.Lets see Chase end all their partner credit card programs and see how profitable their credit card division is if they are such big shots.They wouldn't dare in two years the C in the Chase logo would read Citibank or some other brand :)