Debit card rewards expanding

El Paso County’s two largest credit unions have joined with a Denver-based company to pay cash rewards for debit card transactions with some merchants.

Ent Federal Credit Union began paying rewards of up to 20 percent Tuesday on debit card transactions with 128 local merchants and about 1,900 others statewide, while Air Academy Federal Credit Union expects to launch its program within three months.

Both credit unions are offering the cash rewards through a partnership with Rainbow Rewards USA Inc., which started the program three years ago. The program also is offered by 16 other Colorado credit unions and a credit card offered through Frontier Airlines.

“The market is really at a stage that if we don’t offer something like this we would be at a competitive disadvantage,” said Jim Moore, Ent’s senior vice president.

Ent has been discussing the program with Rainbow since late last summer, he said.

Ent has 102,000 members with debit cards, while Air Academy members have 46,000 cards.

Rewards will be paid quarterly to members by either check or direct deposit, but only after members have earned at least $25. Payments by check carry a $3 service fee.

As part of the program, 3 percent of every purchase will be donated to the Pikes Peak United Way, while 0.5 percent will go to charities designated by the two credit unions. All rewards payments are made by merchants.

Ent’s donations go to Home Front Cares, which helps southern Colorado military personnel and their families, while Air Academy’s donations will go to its foundation, which supports economics and financial education efforts at local school districts.

“The program is designed to build customer loyalty” for participating merchants, primarily locally owned businesses, said Rainbow Rewards President Steve Katich.

The company eventually plans to add national chains to its merchant list, he said.

Some banks began paying rebates and rewards to customers to encourage debit card use about 10 years ago, but the programs are now becoming more widespread, said Larry Martin of Bank Strategies LLC, a Denver-based bank consulting firm.