Capital One Financial is introducing an innovative new concept to the world of credit cards. The credit card issuing company will soon be offering a new debit card that offers a rewards program. In addition, cardholders will be able to “link” the debit card to any bank desired. Yet, they will still be able to make ATM withdrawals and purchases just as they could with their own bank-issued debit card.
In another interesting twist, Capital One will be working with a variety of different retailers in order to offer co-branded debit cards, which will allow the cardholders to earn bonus reward points when they make purchases with that particular retailer. All other purchases will still earn points but at a lower rate. The earned points can then be redeemed with that retailer for gift cards.
Since most debit cards do not offer rewards or, if they do, the rewards are minimal, this is another way the new Capital One card will be different from other debit cards currently on the market. There are no fees associated with the card. On the other hand, there is nothing stopping the bank that the card is linked to from imposing its own fees.
Currently, the new Capital One card is only being offered to a select group of Capital One cardholders. By 2008, however, the company plans to have the card widely available to anyone interested in using the card.
Capital One is offering this card partly in response to the fact that many consumers are deciding to use their debit cards rather than their credit cards in an attempt to prevent going into debt. In fact, recent research has found that approximately 28% of Americans used their Visa or MasterCard debit cards last year to make their purchases. This is up from 17% in 2000. Similarly, the number of people using credit cards went down from 82% in 2000 to 73% in 2006.
With this new debit card concept, there are likely to be a number of questions brought up by consumers. One concern is protection if the card is lost or stolen. Rather than calling the bank that the card is linked up to, cardholders will be directed to contact Capital One. Capital One will then reimburse the card holder for any fraudulent charges that were made to their checking accounts.
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