Most banks fund reward card programs using revenue from merchant interchange fees and marketing agreements. For instance, gas stations often partner with card issuers to offer special bonus rewards designed to build customer loyalty. By extending traditional points, miles, perks, and rebates to debit card customers, banks reap larger profits without the need to extend credit lines.
Similarly, bank customers with poor credit histories often found themselves excluded from the very best reward credit cards. Through reward debit card programs, checking account customers can now enjoy the kinds of benefits that many credit card account holders have taken for granted. With First Data's report showing that reward debit cards usually stay at the "front of the wallet," bank executives anticipate expanding these programs.
About the Author
Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.