Citing the impact of overdraft regulation last year and the coming cap on interchange fees, the $383 million Gulf Winds Federal Credit Union is halting its Visa debit card rewards program effective July 31.
In a website announcement, the Pensacola, Fla., credit union said the combination of the "opt-in overdraft regulation and the Durbin amendment significantly" impacts the ability of Gulf Winds to offer certain benefits including free checking and card rewards.
Pointing to economic conditions, Gulf Winds said "in the best interests of Gulf Winds and its membership as a whole," the Visa program is being discontinued with grandfathered provisions.
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"After July 31, you will continue to earn rewards only on Gulf Winds Visa Credit Card or Mastercard purchases," said the website. Members, however, can make a switch to the CU's own credit card and keep getting credit toward rewards, the announcement said.
The CU's announcement said the current banking climate "and regulatory changes have presented unique challenges to the entire banking industry." The statement noted press accounts of how financial institutions expect to start charging customers for services that are now free.
On that, Gulf Winds pledged "to do everything we can to continue" the CU's own free checking services.
Without detailing the number of accounts that might be impacted, Kurt Stenerson, vice president of marketing for the 48,000-member credit union, said Gulf Winds has little more "to add or to make further comments."
The Gulf Winds move follows an announcement by its Pensacola competitor, the $1 billion Pen Air FCU, that it's starting a new point-based rewards program that includes checking, saving and loan accounts.
Pen Air said in offering "Premier Relationship Rewards" it seeks to buck the trend of both local and national banks and CUs "cutting back on services or charging additional fees."
The Chicago-based Raddon Financial Group told Credit Union Times on Tuesday the Gulf Winds move more accurately reflects the current trend of CUs and banks preparing to follow suit depending on action in Congress.
"Many are still sitting on the fence but the definite trend going forward is to cut back on such programs," said William Handel, vice president of research.
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