MADISON, Wis. (12/27/11)--During the consumer backlash against debit card fees prior to Bank Transfer Day on Nov. 5, many credit unions promoted their fee-free services by taking one step more: paying members to use their debit cards. Some banks took a lesson, and in their scramble to find new sources of revenue, some are promoting the use of debit cards and online channels.
For example, because it is in a highly competitive area and taking more desperate measures to attract consumers, North Shore Bank in Peabody, Mass., announced it would try something it has never done before: pay customers to increase their use of debit cards and automated channels. The move is a way to increase fee income, attract younger consumers and comply with new interchange regulations, said Bank Technology News (Dec. 20).
Unlike many credit unions' anti-fee campaigns, the bank's rebate comes with restrictions. It will pay $3 per month to consumers who hit a certain account balance, who use a digital channel and who meet transaction targets.
It also would reimburse customers up to $25 per month in ATM fees from other banks. The cash back checking program, however, requires an average daily balance of $1,000 to avoid the $12 service fee. To get the rebate, customers must receive direct deposits into their account, sign up for electronic ATM statements and conduct at least 10 debit card point-of-sale transactions and a minimum of three bill payments through the bank's web portal.
Credit unions used rebates in their no-fee campaigns while the Bank Transfer Day events were heating up. They are still gaining attention for their anti-bank fee stance.
For example, in September, just as Bank Transfer Day was becoming a household word, Pioneer West Virginia FCU, Charleston, W.Va., started running an advertisement, "Fee'd up with banks? Let's make change." It paid members five cents every time they used the credit union's debit card. The ad declared, "Finally, checking that makes cents!"
Pioneer CEO C. Dana Rawlings told the Charleston Daily Mail that the credit union has some members who swipe their cards 50 to 60 times a month. The campaign attracted about 75 new members who opened checking accounts and asked for debit cards during October and November. That's about twice what the credit unions would open in a normal two-month period and isn't bad in a state where there are no offices of Bank of America--the bank whose planned debit card fee prompted Bank Transfer Day and the wave of consumer backlash. Pioneer has budgeted $3,500 a month in payouts for 2012.
West Virginia Central CU, Parkersburg, ran a similar campaign in November and December that was well-received. Members like getting rewards instead of paying fees, Michael Tucker, president/CEO, told the Daily Mail. The credit union had 180,000 debit card transactions in November and paid members about $9,000 in nickel rebates. The uptick in volume was "substantial," he said.