PNC Financial Services (PNC) is scaling back some of the perks it gives credit and debit card customers, by changing its formula for calculating some bonus rewards points earned on card purchases.

Starting July 1, the bank will reduce ways that credit and debit card customers can earn bonus points on their purchases. PNC will start tallying "enhanced rewards bonus points" each billing cycle based only on "base points" earned for qualifying purchases. It currently calculates those bonuses based on a combination of base points and additional bonus points earned under other promotional programs, including a "purchase payback" program, which lets customers get extra points for shopping at certain merchants.

"It's a change that's going to award consumers with fewer bonus points than they were previously getting," says Odysseas Papadimitriou, founder and chief executive of Evolution Finance Inc.'s

PNC spokesman Fred Solomon says that the bank's "change does alter the calculation, but our offering remains both competitive and attractive."

"We occasionally review the total offering to consumers and make adjustments based on customer preferences and our positioning in the marketplace," he added in an email.

The move is also in line with rewards program changes other banks are making, Joe Rockey, an executive vice president at PNC told American Banker on Friday on the sidelines of a financial services and technology conference in Boston.

"First off, I would tell you that just about every bank in the country is doing this and while I'm not deeply involved in the retail strategy from PNC's perspective, we look at our products constantly," he said.

Many banks have altered or eliminated rewards programs in the wake of new regulations on credit cards, debit cards and checking accounts established in the past few years, including the so-called Durbin amendment to the Dodd-Frank Act that capped debit card interchange fees last year.

"After we've gone through the debit interchange impact, we are seeing a lot of the banks adjust these rewards programs, just because there's not the incentive to use this as much as in the past," says Marty Mosby, an analyst with Guggenheim Partners.

"I think we're getting towards where most have gone through that process," Mosby adds. "This was something that we heard a lot of last year" ahead of the interchange fee cap going into effect.'s Papadimitriou also said that PNC did not clearly disclose the changes to customers.

"It's extremely confusing the way it's laid out, and it is partially designed so that people don't even realize the change," he says. "You need to read the paragraph four times carefully to understand what they're talking about."

When asked to comment about the bank's disclosures, PNC's Solomon said, "The value of PNC points is in its combination with the PNC Purchase Payback program, which delivers targeted offers to PNC points customers through online banking."

The terms and conditions describing the new enhanced rewards point calculation were dated March 31, according to PNC's website. Customers also received a letter detailing the changes on April 20.

"Effective 07/01/2012, the calculation of Enhanced Rewards Bonus Points will change. Currently these Bonus Points are based on the total of all points earned under the PNC points Program including Base Points and Bonus Points (exclusive of previously earned Enhanced Rewards Bonus Points) during the previous Billing Cycle. The term 'Base Points' means all points earned exclusive of any Bonus Points," PNC says on its website.

"As of the effective date, Purchase Payback Bonus Points and any points from other special Bonus Point offers will also be excluded from the calculation of Enhanced Rewards Bonus Points. The Enhanced Rewards Bonus Points will be calculated on Base Points earned during the previous Billing Cycle only," the bank adds in its terms and conditions.

Papadimitriou calls the PNC rewards program "complex" overall, because it is difficult to quickly understand the connection between points and rewards.

For example, he says, a consumer gets 4 points for every qualifying $1 spent on a credit card. So if a shopper buys $50 worth of gas, he earns 200 points. But a $25 gift card for Bath & Body Works is listed for 11,000 points on the bank's rewards website.

"That's less than 1% cash back…. It's not very clear about how much value you are getting out of this," says Papadimitriou.

"A lot of people think it's a binary thing: whether you get rewards or not," he adds. "What people need to realize is that getting rewards is almost as bad as not getting rewards, depending on what card that you use."

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