Banks are digging into their goody bags again to lure customers. But instead of toasters for new savings accounts, they're offering phone cards, movie tickets and discounts at retailers for those who use their latest product: debit cards.
The small-time giveaways are part of an emerging marketing drive by Bank of America, Home Savings of America and others that have staked a lot on debit cards--the new-styled plastic that looks like a credit card but works like a check. Over the last few years, they have showered the nation with more than 50 million debit cards with Visa and MasterCard logos on them, generally sending them as replacements for ATM cards.
Although that has fueled the growth of debit card purchases, the reality is that most debit cardholders have yet to venture beyond the standard ATM withdrawal. Lingering consumer confusion and worries that card thieves could clean out customer checking accounts have contributed to the limited use of debit cards at restaurants, department stores and the millions of other retail outlets that accept Visa and MasterCard, including debit cards with their logos.
But a Gallup survey released Wednesday found that more than 80% of consumers are now aware of debit cards. And earlier this summer, Visa and MasterCard assured consumers they won't be held responsible for more than $50 in losses on lost or stolen cards.
Financial institutions say they now feel more comfortable to promote debit cards more aggressively in branches. And bank marketing executives think consumers also are now ready for debit cards but need a bit of push. Hence, banks are rewarding first-time users with small gifts such as solar-powered calculators and movie tickets.
"The banks are doing things to get people to use it, believing once they do that they'll be hooked," said Rich Mitchell, managing editor at Card Technology Magazine in Chicago.
Nandita Bakhshi, a senior vice president at Home Savings, the nation's second-largest savings and loan, confirmed that rationale. She said her tests with a cash-rebate program found that 70% of customers who activate their debit cards become regular users. The problem, however, is that the cash rebate program prompted just 12% of the nonusers to even try it.
"We're looking to do a big push for the holiday season," Bakhshi said, adding that she's preparing a new promotion that rewards first-time users a pair of free movie tickets.
