U.S. Bank. J.P. Morgan Chase. Wells Fargo. Big banks are axing their debit card rewards, blaming regulatory changes that make the programs too expensive to offer.

Chase and U.S. Bank stopped enrolling new customers for debit rewards in February. Wells Fargo announced late last month that it would do the same beginning April 15.

Both are continuing debit rewards for existing customers -- for now. But Chase customers will stop earning points come July.

The banks are responding to the Federal Reserve proposal to cap the fees collected from retailers when a debit card is swiped at the register. The proposed 12-cent-per-transaction limit is well below the average 44 cents currently earned by banks. Banks say that if this goes through, consumer pocketbooks will feel it. The Fed is expected to make a final ruling later this year.

Like credit card rewards, debit rewards are earned for using your card. They accrue in the form of cash, or points that are redeemed for merchandise or airline tickets. Reward debit cards typically earn between two to four points for every dollar spent -- half what's earned by credit cards -- and are offered by nearly six in 10 financial institutions.

In these economic times, "rewards are a big draw," said Bill Hardekopf of www.lowcards.com. But they're not the main draw for debit cards, which have surpassed credit cards as America's plastic of choice.

People like debit cards because of the seamless access to their checking account, plus the ease of electronic transactions without the fear of ballooning debt. The focus is not on the rewards programs. Many customers don't even know they exist, said Patricia Hewitt, who studies debit cards for Boston-based Mercator Advisory Group.

If your bank took debit rewards away, would you go through the headache of switching banks. Probably not, right?

This is in stark contrast to the highly competitive credit card industry trying to please devotees who have no problem dumping one card for another if the rewards are hotter. (Guilty!)

In the upcoming months, don't be surprised if your debit rewards go away. However, when the dust settles, "it's a have-to have in today's market," said Madeline Aufseeser, senior analyst for the Aite Group. "[Banks] will still need a way to differentiate their product offering and make it more attractive than the guy next door."

The programs will just look different, analysts say. Hewitt thinks we'll see more debit rewards programs that will cost a small fee to participate, or rewards only being offered on certain account types. Some debit programs may even offer fee waivers for bank services as the reward.

Will the reward program be compelling enough to buy it? Doubtful.

If it's not the consumer paying, it will be the merchant. Currently, financial institutions mostly pay for rewards through transaction fees. An emerging trend in the banking industry is the merchant-funded programs, which offers debit card users discounts at particular stores depending on a person's spending patterns.

Target Corp. recently restructured its Target debit card offering, and now slices 5 percent off every transaction. It no longer offers Visa co-branded cards, enabling them to circumvent the Visa fees.

In the meantime, what should a die-hard debit-card rewards lover do?

First, don't panic that you'll lose your points or cash back. The banks I contacted insisted that ample time would be given for customers to redeem rewards before programs are completely shuttered. Still, if I had a stash, I'd spend it soon.

Thing is, I've relegated my debit card to ATM duty. Credit cards offer richer rewards, with banks able to cover the cost through interest rate charges, not just transaction fees. Credit cards also provide greater consumer protections, allowing you to withhold payment if you're disputing a purchase, and some provide perks such as extended warranties and price protection. If you handle credit responsibly and always pay your credit card balance off in full, switching your payment choice could make sense.

Finally, this is the era of value-conscious consumers -- everyone is vying for their attention. Most major retailers offer a loyalty program that's tied to your purchases, but not your choice of payment. Every household is enrolled in an average of 14 reward programs, according to Colloquy, a Cincinnati-based loyalty marketing firm.

Would you honestly miss another one?

Kara McGuire • 612-673-7293 or kmcguire@startribune.com. Follow Kara on Twitter: @kablog