For those consumers who are credit worthy, higher value payment cards are available, but there is always danger in the details. Bank of America is hoping their investment clients, who are accustomed to using a deferred debit card to make purchases against their brokerage accounts, will accept a credit card instead. However, this changes the game up a bit, as one would assume these clients already have access to premium credit card programs and may evaluate the change against the credit cards they already use.
The market has been anticipating the debit-to-credit switch as one reaction to debit interchange regulation, but within a weak consumer credit market, we would expect to see these strategies being targeted to the upper end of the market, such as this one from Bank of America.
“The bank is luring its brokerage clients into signing up for credit cards and giving up their deferred-debit cards by allowing them to retain their existing reward points, and also giving them additional points for making the switch.”