• by Tanya Gazdik , August 1, 2011

While such programs have been viewed by banks as an easy way to gain and retain customers and have been marketed heavily, Mintel found that debit card programs alone aren't likely to foster customer loyalty, as 47% of respondents who participate in a debit rewards program have never redeemed their points.

Capital One and Citibank both heavily promote the programs, says Susan Wolfe, VP of financial services at Mintel Comperemedia.

"Citibank's program goes beyond just debit rewards -- customers earn points for all their banking activity," Wolfe tells Marketing Daily. "The Capital One program is not quite as extensive, but it allows customers to earn rewards through everyday banking activities such as debit card purchases, check writing and online bill payment."

These more extensive programs might work harder to instill customer loyalty because customers can accumulate a significant number of points more quickly and thus redeem more often or for higher ticket items, Wolfe adds. Plus, they are more likely to ensure the account is the primary account.

"Long term, banks need to look beyond reward programs to loyalty programs," Wolfe says. "Banks struggle with customer loyalty and establishing something that goes beyond material rewards and instead offers features, benefits and services might help banks in earning stronger customer loyalty."

Mintel Comperemedia segmented survey respondents into three groups: heavy (redeem about once a month), medium (redeem every few to every six months) and light (redeem once a year) redeemers. Thirty-six percent of heavy redeemers and 30% of medium redeemers, compared to 55% of light redeemers, would continue to use their debit card the same way if their bank eliminated their debit rewards program, further suggesting that debit rewards programs are not a strong incentive to stick with a particular banking institution.

The survey also assessed consumers' willingness to pay for a debit rewards program and found that 36% of heavy redeemers are willing to pay as much as $4/month for their debit reward program, while 61% would be willing to pay $1/month. Not surprisingly, it's those who redeem often who are most willing to pay extra for the benefits.