Given a choice, some 76% of debit cardholders would sooner give up receiving rewards for their debit card use than absorb any fees for using their cards, new survey data show.
In its March online survey of 501 U.S. debit card account customers, Auriemma Consulting Group examined how consumers would react if banks followed through on threats to introduce debit card fees to offset the effects of the Federal Reserve Board’s proposed 12-cent cap in debit card interchange.
The results of the research suggest debit card issuers will face challenges in finding the right mix of services to make debit-account fees palatable, Auriemma says.
If forced to pay for debit card services, 54% of respondents said they would prefer to pay a monthly $5 fee than an annual fee plus per-transaction charges, Auriemma found. Moreover, 32% of respondents said they would opt to pay an annual fee of $12 for a debit card plus a 7-cent transaction fee.
Given the industry average of consumers initiating 18 debit card transactions per month, the annual-fee option would cost consumers less (about $30 annually) compared with about $60 annually for a flat $5 monthly fee, Patricia Sahm, Auriemma managing director, noted in a press release
“(Our) research has consistently shown that consumers react more strongly to the payment amount than to the total cost of service,” Sahm said.
Some 33% of respondents said they receive rewards for their debit card use, Auriemma’s data show. Some 12% of respondents pay an annual fee, and another 20% must maintain a minimum account balance to avoid paying a fee.
Some 70% of respondents pay no annual fee. And no minimum-balance requirements will pose a challenge to banks considering adding fees, Sahm suggested.
“Minimum-balance requirements are more palatable than maintenance fees, especially for more-affluent customers,” Sahm said. “As we move from an environment where no-fee debit/checking is the norm, the desire to avoid fees may help banks with deposit and asset-gathering, giving them more opportunity in investment and wealth management.”
