Debit Card Rewards Aren't All Rewarding

Credit-leery Americans have embraced pay-as-you-go plastic.

Debit cards accounted for 65% of all card transactions in the first half of 2010, according to the Nilson Report. So banks are using free debit rewards programs to entice customers to use their cards.

Debit rewards are almost always less generous than credit-card rewards, but the Citibank and PNC programs are better than others. Once you enroll in PNC Points, you earn two points for every $1 you spend on gas, groceries and drugstore items, and one point on everything else. Plus, you earn points each time you use PNC's online bill-payment service and make an automatic debit. You can earn up to 500 points a month for each service, and you can combine those points with the rewards points you earn with the bank's credit cards.

With the Citibank ThankYou Rewards program, you earn extra points when you use your debit card at some 400 participating merchants. Plus, you earn points if you link your checking account to a long list of products -- including a mortgage, home-equity line of credit, student loan or certificate of deposit -- and you can combine credit- and debit-card rewards points.

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If your bank charges for a debit rewards card, you're better off politely declining. SunTrust's Delta SkyMiles Classic Check card has a $20 annual fee and awards one mile for every $2 spent, so your rewards won't pile up quickly. In all cases, you must sign for your purchases to get debit-card rewards.

Rewards vary from bank to bank. With most programs, you can redeem your points either for merchandise or gift cards.

Senior Reporter, Kiplinger's Personal Finance