The Growth of Debit Card Services
December 27th, 2010 | Author: weissheiss
As consumers move in greater numbers from credit cards to debit cards – drawn by convenience and lack of interest fees – banks are beginning to offer more and more debit card services. This is in the banks’ interest. Aside from the money they generate from your debit card use, strengthening relationships with consumers through enticing debit card services can lead to opportunities to cross-sell other resources, like savings accounts and certificates of deposit.
Credit card companies generally make more money off card transactions than banks do off debit card use, which has meant that debit card services have been less rewarding than those offered by credit cards. One tactic banks are now taking to even the playing field is offering debit services for an annual fee, which allows them to offer rewards that match those offered by credit card companies. If you’re someone who uses your card frequently, an annual fee of $20 to $25 can be well worth the rewards you’ll gain.
The Varieties of Debit Card Service Rewards
Banks are focusing a lot of debit card services on partnerships with retailers, both online and at in-store locations, offering discounts or rewards much more generous than their regular rewards. In these arrangements, the retailer usually covers the costs, so the rewards can be as much as 20% to 25%. What the retailer gains is the opportunity to track your buying patterns, so they can offer you targeted offers. If you’re comfortable trading this information for the discounts that result, this kind of service can be well worth your while.
Some banks are beginning to offer cash back debit card services. This means you get a set number of points each month just for having a checking account! Some community banks and credit unions provide percentage earnings on your checking account depending on how many times you use your card per month.
With so many companies now competing for your loyalty, it’s worth doing some research into the variety of card services available before making your choice.
Some Details on Debit Card Service Rewards
Let’s look at some of the popular services being offered, aside from general retail discounts:
* Airline Miles
* Music
* Coffee
* Fraud Protection
Visa and MasterCard cards have long offered the opportunity to earn airline miles by using your them, and this service is becoming more and more widespread. Other more specific services are also becoming more common.
PerkStreet Financial offers one of the most rewarding online checking accounts around. Let’s take a look at the PerkStreet Financial Visa Debit Card, which comes with the checking account. The PerkStreet card offers three rewards options:
* Coffee Perk: Earn 1% for all non-PIN transactions that can be redeemed for gift cards at coffee shops like Starbucks and Dunkin Donuts
* Music Perk: Earn 1% for all non-PIN transactions that can be redeemed for gifts at iTunes, Amazon, or Rhapsody.
* Cash Perk: Earn 1% for all non-PIN transactions that can be converted into any one of several gift cards, including Amazon, the Gap, Target, and Best Buy
But we’ve saved one of the most practical services for last: fraud protection. Credit card liability is covered by federal law, but liability on debit cards is up to the policies of individual companies. Without a specific liability program in place, if you don’t report fraud quickly you can, by law, be liable for the full amount of the fraud – which means your entire account can potentially be cleared out.
Visa offers a strong Zero Liability program. More and more companies are stepping up to the plate on liability – make sure you look closely at liability policies before you choose a card.
Posted in Debit Card Protection | 
Tags: Card Transactions, Checking Account, Debit Card Services, Earnings, Loyalty, Partnerships, Rewards, Store Locations