Debit Cards Offer Rewards Too

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By Candice Choi, AP Personal Finance Writer

NEW YORK (AP) — Credit cards aren't the only way you can earn rewards.

Several banks now let shoppers earn points or cash rebates with debit cards as well. The rewards may not be as rich as under credit card programs, however. And there are some trade-offs to keep in mind.

To start, debit card programs often require you to sign for purchases, rather than punch in a PIN code. This is 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 make a point of requesting the option.

Some programs also have annual fees, and it can be tricky determining if they're worthwhile. The value of reward points varies from bank to bank, as will other terms.

Here's a snapshot of what four major banks offer.

Bank of America

Bank of America offers a couple of rewards debit cards. Its programs with US Airways and Alaska Air come with a $30 annual fee, and offer 1 mile for every $2 spent. A Nascar card offers 1 point for every $4 spent, and it's free if you sign up online.

All debit transactions qualify for points, regardless of whether they're signature or PIN purchases.

Customers can also enroll in the bank's "Keep the Change" rewards program, as long as you have a Bank of America checking and savings account. The setup is a bit complicated, however.

Purchases are rounded up to the nearest dollar, and the difference is transferred to your savings account. The bank matches 100% of transfers for the first three months, and 5% thereafter. Matches are capped at $250 a year.

Annual Fee: Varies.

Chase

There's no cost to enroll in the Chase Extras program. Cardholders receive 1 point for every $5 in signature purchases and there's no cap on earnings.

For a $25 annual fee, you can earn 4 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 would need to spend $6,250.

Chase also offers debit cards linked to Continental and United airlines. There's a $25 annual fee for those programs, which earn 1 mile for every $2 spent. However, you can opt for the preferred version that comes with a $65 annual fee and provides 1 mile per $1 spent.

Annual Fee: Varies

Citi

There's no cost to enroll. Debit cardholders earn 1 point for every $2 spent with signature purchases, or 1 point for every $3 spent with PIN purchases. In addition, each month there are a certain number of automatic points awarded depending on the type of account you have. 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.

The points are capped at 75,000 points a year.

Annual Fee: None

Wells Fargo

Anyone with a Wells Fargo debit card can enroll. 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, travel and merchandise. You need a minimum of 650 points to earn rewards — that gets you a $5 gift certificate to places including Barnes & Noble, Starbucks, Walgreens and other retailers.

Annual Fee: $12

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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