Debit cards and credit cards have been around for decades. The two are very different, and normally, debit cards don’t include typical rewards programs like credit cards. In other words, debit card users have been missing out on the opportunity to earn points, miles or cash back while spending. That is now changing, thanks in large part to the demands of consumers.
Research indicates younger generations prefer using a debit card as their primary payment method. Not only have they been missing out on the opportunity to accrue those rewards, but businesses are also losing out on the opportunity to build loyalty with customers.
Those factors are leading to a significant pivot, and we are seeing a rise in debit cards offering rewards.
How Debit Card Rewards Work
Consumers usually run into two roadblocks when it comes to credit cards: they can’t pay the annual fee, or they don’t have enough established credit to qualify for the card. Some don’t even apply to avoid racking up debt.
Enter debit cards with rewards. The concept marries the traditional debit card (drawing funds from a checking account) with the rewards system of a credit card. And the qualifications aren’t any different from a traditional debit card.
Debit cards with rewards aren’t a completely new concept. Some banks use them to drive deposits, and retailers have used them in the past for lower-spend purchases. But they’ve never been used in the hospitality industry, which is where reward systems were born.
Travel, Hospitality and Entertainment Rewards
In recent months, Sunrise Banks partnered with three well-known companies — United Airlines, Southwest Airlines and Wyndham Hotels and Resorts — to be the issuer on new debit cards with rewards for each brand.
Travel and entertainment purchases for the average person occur less frequently and are usually more expensive than everyday purchases. People tend to be price-sensitive because they have a limited number of vacation days, and they want the time off to be smooth, convenient and easy. If a brand can provide that, the consumer will return. And if the consumer receives some sort of reward along the way, they’re even more likely to return, building a sense of loyalty to the brand.
It also levels the playing field by granting access to a rewards program for those who don’t want to pay an annual fee or wouldn’t normally qualify for a typical credit card.
Empowering Financial Wellness
Financial wellness is a part of a person’s overall wellness. At Sunrise Banks, we want to empower everyone to be financially healthy. The ability to accrue rewards while making purchases in a way that best suits each person is both important and fair.
Sunrise Banks has long been a leader in financial innovation and doing good for all. This is one more part of our journey towards providing the best products and services for all.
Sunrise Banks strives to provide innovative solutions that empower financial wellness and advance financial equity. Learn more at sunrisebanks.com/fintech-partnerships.
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