Want debit rewards? You may have to make a bigger commitment to your bank.
KeyBank (NYSE: KEY) on Monday plans to announce a revamping of its debit rewards program. The changes, which are designed to encourage customers to sign up for more services, reflect a growing trend in the industry.
KeyBank is based in Cleveland and operates about 1,000 branches around the country.
Previously, KeyBank checking account customers simply earned points whenever they made debit card purchases. The new program is more complex.
To start, customers with basic checking accounts will now have to pay $30 a year to enroll in the program, up from $20. The fee is waived for customers with premium accounts that are packaged with other services.
Customers will still be able to earn points with debit card purchases. But now they'll also be able to earn points by using certain features and services. For example, customers will get 2,500 bonus points in each of the first three months that they make 10 or more online bill payments. They can also earn 100 points for every month that they opt for an online statement instead of a paper statement.
Some of the changes went into effect this weekend; others take effect Dec. 9. For details, go to key.com/rewards .
Banks have been revamping their fees and terms to adjust to a regulation that will limit the revenue checking accounts bring in.
Starting in October, a cap will reduce the fees banks collect from merchants whenever customers swipe their debit cards. This summer, KeyBank said that it expects the cap to result in a revenue decline ranging from $50 million to $60 million a year.
KeyBank isn't alone in rethinking its rewards program as a result of the cap. In the past year, banks including Chase, Wells Fargo and PNC Bank have ended or scaled back their rewards programs as well.
And last week, Citibank said customers will no longer earn points for debit card purchases. Instead, customers will be able to earn points based on the type of account and breadth of services they sign up for.