Finance & Investment Articles - Using Debit Cards Mean Rewards Too
It used to be that credit cards are the only ones to give major points and extravagant rewards to frequent users. But with the decline of the economy and with more and more people enlightened with the advantages of debt-free lifestyle, debit cards sales went up to almost triple over the last years. From 2001 to 2005 alone, 26% of purchases were made through debit cards, says American Bankers Association and Dove Consulting. Increasingly, credit card sales and purchases are seeing important decline.
This goes to say that people are using more debit cards in their purchases. Even if it means direct deduction from their savings account, at least they know they won’t be paying high interest rates at the end of the month. Using debit cards also prompts people to spend wisely as credit card is the least favorable of the choices. Whenever they purchase, they tend to think twice and ask themselves if it is worth deducting their savings for. And every time they decide not to pursue buying an item, they save more on their accounts.
And so with the rise of debit card usage, banks and debit card institutions made it a point to offer rewards to frequent users, too. Like credit card rewards, debit card rewards also include accumulation of points which are redeemable as plane tickets, cash, merchandise, or services. Not only that, institutions such as MasterCard announced to deposit money on to their customers’ college savings plan whenever they use their debit cards in transactions such as paying the grocery or gas.
Washington Mutual is giving back 3 cents for every $250 worth of purchase each year in rebates. Additionally, Citibank rewards points for their debit card service now as well as Bank of America. Other banks and debit card distributors are also giving consideration to the thought of rewards system for debit cards.
Unlike credit card points system, however, a debit card earns points a little longer. As an example, if banks offer one point for every $5 purchase on credit cards, debit cards usage earns one point for every $10 worth of transaction. Therefore, to acquire merchandise using debit card points, it will take twice longer for a person to do this compared to when he is using credit card points.
But no matter the disadvantage in rewards system, debit cards still remain to be the fastest contender in electronic sales. Experts believe they are seeing a new trend in the marketplace as more and more people use debit cards everyday.
Related Tags: credit, card, rewards
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