Find More Rewards With Debit Cards

January 27, 2010 by tisha

ing back on their credit card application and usage since the credit crisis of the last few years. More consumers are switching over to debit cards, trying to maintain a cash-only existence. It is estimated that there are now more debit than credit card users according to the latest research statistics. Since debit card use is up, banks are taking note.

Credit cards have traditionally offered rewards programs as an incentive for users. Those programs have been on the decline for the last several years. It should be no surprise that debit cards offering similar rewards programs have increased significantly in the last year. Banks are hoping to attract new business because they need the revenue. Recent regulations will change the way banks due business. Since they are no longer able to collect excessive fees for things like overdrafts, banks need a way to make up for these changes. Banks also have the added benefit based on how the debit card works. The cards are linked directly to a checking account so the bank has a good chance of successful cross-promotion of other goods including savings accounts and loans.

Generating revenue from the debit card incentive programs isn’t easy and it doesn’t come cheap. Most banks shell out up to $25 for reward program members each year when you factor in the costs of technology, advertising, and the cash rewards or other items of redemption. Similar credit card rewards programs cost more – on average $30 per member each year. But banks know they have to maintain consumer interest for the programs to work. Otherwise they risk having consumers go back to the traditional credit card. Debit cards reward programs are also a bit more limited than their credit card counterparts because it can be difficult to develop an intriguing rewards program based solely on the use of checking account funds.

What To Expect Now?
Most debit card rewards involved earning points for each dollar or two dollars spent. Now many banks are upping the ante and creating more credit card-like incentives for an annual fee. Enrolled members can potentially earn 3-4 points for each dollar spent. Points are redeemable for cash and other reward items depending on the bank. Consumers who use debit cards very frequently may be able to recoup the membership fee as well as earn additional incentives throughout the year. Many banks are allowing rewards points to be earned for simple, everyday banking procedures. Opening a new savings account can earn customers cash back or extra reward points.

Many banks are hooking up with retailers to offer special discounts or exclusive rewards. In the past, these retail affiliates were online based but now customers can also expect rewards and discounts at local locations and not just on a website. Expect community banks and local credit unions to also begin offering rewards based on checking accounts if you use your debit card actively and agree to direct deposit your pay to your bank account.

If you are a regular debit card user, it may be worth your while to check out what incentive programs mean to you. There may be special offers that you are not yet aware of and you could be missing out on those incentives. Check with your bank if you have a debit card and find out what you can be doing to earn more cash back and points simply for doing what you normally do.


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