While some of America's biggest banks closed their debit rewards programs earlier this year, using your check card can still pay off.
Last month, Ally Bank unveiled a free rewards program that offers cash back on some debit card purchases. The program doesn't function exactly the way debit rewards programs worked at other banks, though. Rather than accumulating points for redemption, the program gives account holders cash back for certain purchases made with merchant partners.
The program is available to the bank's interest checking account holders. Here’s how it works:
- Log into your online banking account to view current offers available.
- Make a qualifying purchase from one of the merchants, which include iTunes, Target Online, Lowe's and other retailers.
- The bank deposits cash into the account of your choice: checking, savings or money market account.
Bank of Internet, another online-only bank, introduced a similar program in May, which provides cash-back reward offers based on individual spending patterns.
I'm curious to see how these will be received. They seem a bit more like temptations that could lead to some unnecessary spending. These are offers, options you must take advantage of in order to receive the reward. Still, it’s good to see there are institutions in the banking world that can continue to reward customers rather than weigh them down with fees.
My previous program gave me points for nearly everything. I didn't have to think; I just knew that swiping my card meant earning points I could later redeem for cash back, gift cards, charity donations and a seemingly endless list of other goodies.
Remember that Ally and Bank of Internet have lower overhead expenses than the traditional brick-and-mortar banks. Without massive branch networks and long employee payrolls, online-only banks can afford this type of rewards program more easily. They may use that ability as a marketing tool to lure frustrated account holders away from financial homes that have become less rewarding.
What are your thoughts? Does the new school of debit rewards programs appeal to you? If so, would you be willing to switch to an Internet bank in order to take advantage of it?