Should You Offer Rewards For Your Card Holders?


Have you gone to the mall recently and noticed that the majority of the stores offer a rewards program when you make a purchase from them, which you can then redeem on future purchases? This is because these stores are trying to build a loyalty program that will influence the customer’s decision to buy again from that same brand.

I know one day I found myself browsing the internet and multiple ads from various vendors popped up offering different incentives if I opened an account through them. The ones that I found catching my eye the most were the ones that offered card promotions. I was shocked to see that I could be enrolled in a card rewards program with both a debit and a credit card.

This immediately made me go out to my financial institution’s site to see if they offered any rewards program for cardholders that maybe I was just not aware of and just needed to take advantage of it.

What are the member benefits?

So, what did I discover in my search? I found that these programs can range from cash back redemptions which means you can get a certain percentage back on different types of transactions. For example, I could get 2% cash back anytime I used my card on gas purchases and then 1% cash back on all other purchases. This seems like a very small amount in the grand scheme of things, but it does make having to make that purchase a little more bearable. You also can just have one percentage on all types of transactions if you choose to do so.

You can also offer a rewards program where each transaction results in points and then the member can redeem the points to buy merchandise from your financial institution, gift cards, airline miles, etc. Either option shows a member that you’re incentivizing them for just simply using their card rather than cash to make a purchase.

All this to say that by enrolling in these programs, members are being paid back small amounts of the purchases they have to make every day and earning points towards future purchases, making rewards an easy win.

Benefits for credit unions 

But what benefits are there to your financial institution, you ask? Let me start by saying any type of debit or credit card transaction brings interchange income to the financial institution. So, in theory, if your rewards program is enticing enough to keep encouraging your members to swipe their cards then you should see an increase in your interchange income.

You may even see an increase in your finance charge income for credit cards if you have those members who are not ones to pay off their credit card balances each month but continue to use the credit card resulting in a recurring balance. Additionally, as Queue-It states, “The top performing loyalty programs boost revenue from customers who use them by 15-25% annually.” This means not only increased income to the credit union but increased satisfaction and interaction with the credit union from members.

As you can see this becomes a win-win across the board for not only the financial institution but also your members. This is because a member who is engaged in a loyalty program will end up having an increased frequency of shopping.

Start rewarding, start earning!

With that being said, if you don’t offer a rewards incentive for your cardholders today, then reach out to your card processors and your core processor to see what they have to offer and take advantage of it! By doing so, you’ll be creating a stronger tie between the credit union and its members with a program that benefits everyone.


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