Evaluating Checking Account Debit Card Rewards

With the growth of debit card use, banks have rolled out a variety of checking account debit card rewards programs.

These rewards range from high interest rates on checking accounts to points toward merchandise at retail partners. But don't sacrifice common sense to get a few perks. Evaluate all the terms of a checking account to see if you come out ahead if you use the card offers.

Compare Rewards Programs

Rewards on debit cards tend to be skimpier than rewards offered by credit cards. (Gerri Willis at CNN Money estimates that you'd have to spend double what you'd spend on a credit card for the same travel or cash-back reward.) That's because customers who carry balances pay interest on credit cards, so there's more revenue potential there for financial institutions than with debit cards. Compare rewards checking accounts at local banks in your area and online at MoneyRates.com. Choose rewards that will benefit you most. Some banks are partnering with merchants to offer rewards at certain stores. These programs can provide richer returns, but beware that your purchasing information will be used for marketing.

Weigh Rewards Against Checking Account Fees

There's no use signing up for a checking account to get rewards if the monthly maintenance fees exceed the value of the perks. Read the account's disclosure of terms carefully to understand fees and conditions.

Qualifying for Checking Account Debit Card Rewards

How many transactions do you have to make to earn rewards, and how much do you have to spend? Think realistically about whether you can meet those conditions to judge whether the rewards program is worthwhile.

Using Your Checking Account Debit Card: Remember to Sign

Most programs require you to sign for purchases made with your debit card, rather than using your PIN to qualify for rewards. Why? When you sign for the purchase, the transaction goes over the Visa or Mastercard network, and the bank earns a small fee paid by the retailer. Retailers pay more to use the credit card network than for the PIN-based networks, so the bank earns more money when you sign. If you need to make a certain number of signature-based transactions to qualify for rewards, when using your debit card, tell the clerk to process the transaction as a credit instead of debit charge (or select "credit" on the keypad).

There's another advantage to signing. Visa or Mastercard--whichever company has its logo on your debit card--will insure your purchases the way they do for credit cards. Sometimes, too, using your PIN at the point of purchase will trigger additional transaction fees from the retailer or bank.

Beware of Debit Card Risks

If thieves get hold of your debit card and PIN, they can drain your bank account before you realize it. You can dispute those debit card transactions with your bank and get the money back, but it may take a some days or even weeks. Meanwhile, your bank account is empty. But with a credit card, you can dispute the phony charges without suffering a blow to your cash supply.