Candice Choi

Debit cards are offering rewards programs, too, but there are trade-offs

By Candice Choi
Associated Press / April 29, 2010

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Credit cards aren’t the only way to earn rewards. Several banks let shoppers earn points or cash rebates with debit cards, as well. The rewards may not be as rich, however. And there are some trade-offs.

Debit card programs often require you to sign for purchases, rather than punch in a PIN, because banks earn more in retailer fees for signature purchases. Cashiers don’t always ask how shoppers prefer to pay, so you’d have to request the option.

Some programs have annual fees, and it can be tricky determining if they are worthwhile. The value of reward points varies from bank to bank, as will other terms. Here’s a snapshot:

Bank of America. It offers a couple of rewards debit cards. Its programs with US Airways and Alaska Air come with a $30 annual fee and offer one mile for every $2 spent. A Nascar card offers one point for every $4 spent. All debit transactions qualify, whether signature or PIN purchases.

Customers can also enroll in the Keep the Change rewards program, as long as you have a Bank of America checking and savings account. Purchases are rounded up to the nearest dollar, and the difference is transferred to your savings account. The bank matches 100 percent of transfers for the first three months, 5 percent thereafter, capped at $250 a year. The annual fee varies.

Chase. There’s no cost to enroll in Chase Extras. Cardholders receive one point for every $5 in signature purchases, with no cap on earnings.

For a $25 annual fee, you can earn four points for every $5 spent. To give you a benchmark, it takes 5,000 points to earn a $50 Macy’s gift card. So cardholders who don’t pay an annual fee would need to spend $25,000 to earn that gift card. If you pay the annual fee, you’d need to spend $6,250.

Chase also offers cards linked to Continental and United airlines. There’s a $25 annual fee for those programs, which earn one mile for every $2 spent. The preferred version comes with a $65 annual fee and provides one mile per $1 spent.

Citi. There’s no cost to enroll. Debit cardholders earn one point for every $2 spent with signature purchases, or one point for every $3 spent with PIN purchases. Each month, there are a certain number of automatic points awarded, depending on type of account. Someone with a basic checking account, for example, gets 25 free points monthly. You can also earn accelerated points for shopping on the bank’s online mall. Points are capped at 75,000 a year. There is no annual fee.

Wells Fargo. Cardholders receive 1 point for every $4 on signature purchases. Purchases on the bank’s online mall receive 16 bonus points for every $1 spent with your debit card.

There’s no cap on earnings, and you can combine points from your credit and debit cards to redeem rewards, such as gift cards, cash rebates, and merchandise. You need a minimum of 650 points to earn rewards — that gets you a $5 gift certificate to certain retailers. The annual fee is $12.

Candice Choi writes for the Associated Press.