Reward Debit Cards Shift Consumers from Credit Cards
A wave of ad campaigns asking bank customers to make signature transactions with their debit cards coincides with a shift from credit card reward programs to debit card perks and privileges. Recent research by First Data shows an almost even customer migration from reward credit cards to reward debit cards, fueling more profits for banks while reducing risk.

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.