Points Awarded on Debit Cards

Currently, more debit cards are in circulation than credit cards. In addition, as Ron Lieber notes in his article in the Wall Street Journal "banks are scrambling to offer new rewards programs to keep users happy." However, the awards are considerably less generous than those available on credit cards. MasterCard International is rolling out a rewards program aimed at small and medium-sized banks that will allow debit-card holders to earn points that can be traded in for "offerings like free plane tickets, gift certificates to retailers and restaurants, and merchandise ranging from Sony TVs to George Foreman Grills." However, cardholders will earn only one point for every $2.50 of purchases (about 40% of the typical one-point-for-$1 reward structure on credit cards).

Competitor Visa will allow its member banks that issue the Visa debit card to set the exchange rate of debit card purchases and points. A bank may offer anywhere from two points per dollar spent down to only one point for every two dollars spent.