With banks charging debit card fees at every turn, consumers are looking for new ways to save money. And lo and behold, they’re finding that their credit card might be their saving grace. While Wells Fargo, SunTrust, Chase, Regions Bank, Bank of America and other banks have begun implementing monthly debit card fees generally ranging from $3 to $5.
Banks have made using debit less fun. In fact, most of them have even axed their debit card rewards program in favor of these new fees. It seems that using a debit card is less convenient and less profitable than it was before. Are you still using your debit card? Should you?
In 2009, many consumers made the transformation from credit users to debit users. According to information privy to Visa, debit card usage had passed credit card usage in 2008. The data revealed that $206 billion in transactions were made with debit cards, compared to only $203 billion with credit cards. According to the Nilson Report, Americans in 2010 spent $37 billion on debit purchases, and only $19 billion on credit cards.
The mass migration to debit cards occurred before the approval of monthly debit fees, which go in effect in select areas this month. Now, consumers have to re-evaluate their payment options and see if debit payments are really the most beneficial and cost-effective. If you’re one the fence, the credit card companies want to make the switch easy for you, by offering credit cardholders extra rewards programs and lower interest rates.
Here are some cards that will make you rethink your debit card:
Discover Open Road Credit Card: This credit card is perfect if you spend a lot of time eating with friends and family. This card gives you a $150 gift certificate to popular website, restaurant.com upon completion of your first purchase. Also cardholders get two percent cash-back for any purchase made at a gas station or a restaurant for the first $250 you spend a month.
Chase Freedom Visa: This credit card offers a good array of bonuses. You can get $200 cash back after you spend $500 in combined purchases within the first three months of having the card. Bonus categories rotate each quarter, but for the holiday season, five percent cash-back is available for department store, movie and dining store purchases, as well as charitable donations. You have to call to activate the rewards every quarter, but once you do, its endless money saving.
Capital One Cash: This card gives the consumer $100 cash-back after they spend $500 in the first three months. Cardholders will also receive a 50 percent bonus on their yearly cash-back amount. To illustrate, if you garner $1,000 in cash-back rewards in a year, you will be awarded an extra $500 on top of your $1,000. This card also has zero percent APR for any balances you want to transfer. This is good for up to one year after opening the account.
The good news about all of the cards mentioned is that they don’t have an annual fee. Think twice when applying for credit cards, because if you don’t read the fine print, you could end up paying the price later. A good rewards card will do just that – reward you for making your favorite purchases. If the impending monthly debit fees are enough to make you cancel your debit card, rethink the credit card option. Credit cards and their policies aren’t as bad as they used to be, as the CARD Act of 2009, required banks to be clearer when wording credit cards terms and regulations.