Recently, major banks have cut back on their debit card rewards programs. Some large banks, in the past, awarded people who frequently used their debit cards with rewards such as gift cards or statement credits. With the likes of Wells Fargo now ending their debit card rewards programs, these perk are becoming harder and harder to find.
For people who are intent on collecting cash-back bonuses, the best option could be to change to a cash-back credit card, such as a Discover Card. As long as the balance is paid off completely each month and there are no annual fees, rewards credit cards are a good replacement for points-earning debit cards.
However, rewards debit cards are not completely dead. There are still ways to save by using your debit card. The main advantage of staying with a rewards debit card is that you don’t have to worry about paying off your balance monthly because the money is drawn directly from your checking account. So you can earn rewards without having to deal with the array of credit card issues.
Store-specific debit cards are still offering perks. Major big box retailer Target is still promoting the REDCard, a debit card that is linked with your checking account. Users can get 5% cash back instantly when they use the card at Target stores nationwide. If you already shop regularly at Target stores, or if you live near one, the REDCard might be a good idea. Since Target, like Wal-Mart, has everything from groceries to small appliances, it is easy to do a lot of shopping there and rack up your rewards. Unfortunately, if you don’t shop at Target or don’t live near an outlet, this card is almost worthless (unless you are willing to shop online, where the 5% cash-back still applies).
Kohl’s department store has a store credit card (which is associated with Capital One). Though it is a credit card, not a debit card, it does have debit-card-like features. Users receive coupons at the store or in the mail that offer at least 15% off the total purchase price. You can wait for the bill to arrive via mail and pay off your balance or you can walk to customer service at any Kohl’s store and pay off your balance immediately after making the purchase. Since there are no fees (except for fees for interest and late payments) it costs you nothing to use the card if you plan to pay off the balance immediately.
A few other banks are not offering cash-back bonuses with debit cards, but have taken a different route, offering discounts for card users who shop on their web site or shop with their affiliates. Online giant Ally Bank has various coupons and deals for their debit-card-holders. The deals vary and change daily, but there are usually multiple offers to choose from. Chase Bank customers can earn debit card rewards and discounts if they shop through Chase’s online mall. These are certainly welcome perks, although they aren’t really features that can be exploited to earn major rewards points and significant cash-back bonuses.
Another option is to get a charge card that requires that you pay off your balance monthly. American Express has some options that fall into this category. In general, these cards are better that rewards earning debit cards because they offer a higher ratio of points per dollar spent. The Golden Rule with this type of card is that you pay off the balance monthly, otherwise penalties and interest payments can ruin any rewards points gains. That said, if you are intent on earning serious rewards, one of these credit cards or charge cards will earn more than a debit card ever could.