Debit-card rewards programs, which had all but disappeared at the biggest U.S. banks, might be making a comeback.
Citigroup Inc. is considering the idea, as well as other types of rewards for checking and savings accounts, to entice customers to sign up for its fledgling online bank, which it began to roll out nationwide earlier this year.
Instead of offering higher rates to attract deposits, Citigroup will work with retailers it already partners with — such as American Airlines Group Inc. — to tailor rewards to existing credit-card customers, encouraging them to open new accounts, Stephen Bird, chief executive officer of Citigroup's global consumer bank, said at a conference in New York Tuesday.
“They are self-selected members of the American Airlines club and they love miles,” Bird said. “Until now, nobody has said to them, 'Why don't you earn those same miles on your checking and savings accounts?' You're going to be able to do that.”
As competition for deposits has intensified, banks including Discover Financial Services are beginning to offer more rewards on cards linked to checking accounts. Banks had curtailed their debit-card rewards programs after the 2010 passage of a provision known as the Durbin amendment, which limited swipe fees banks could collect on the cards.
“This is about leveraging that data that is in our system in a way that can create growth in a natural way and not get caught up in rate wars,” Bird said.
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