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Data for this episode of Truth In Data is provided by Mercator Advisory Group’s report Debit Rewards: Taking a Focused Approach.
Debit card rewards are in decline but still used by a valuable consumer segment:
- In 2014, 46% of consumers had debit cards with rewards. Today, only 40% do.
- But the millennial segment are using debit rewards, and financial institutions are eager to court millennials long term.
- Debit rewards users are younger (46% are between the age of 18-34), less educated, and likely to earn less than $50K a year.
- The converse is also true: consumers not motivated by debit rewards are older (61% are over 41 years old), better educated, and more likely to earn over $100K.
- Making this distinction is important, because rewards programs are expensive to enroll and maintain.
- Each card holder enrolled in a loyalty program costs more than $50 annually to service.
About this report
Rewards offered with traditional debit cards are still available from large and small financial institutions but are on the decline as debit card issuers look to cut costs in the face of ever smaller product margins. Forty percent of U.S. consumers surveyed by Mercator Advisory Group indicate that they are receiving rewards with their debit card today.
Mercator Advisory Group’s latest research report, Debit Card Rewards: Taking a Focused Approach, discusses new competition faced by debit card issuers and suggests how then can keep their programs motivating yet cost-effective.