Looking for Reward Programs for PIN-Based Debit Card Purchases? Bank of America Has a Few to Consider.

Most people are familiar with credit card reward programs: loyalty programs that reward you with everything from airline miles to cash back when you use your credit card to pay, often for an annual fee. The bank makes money on merchant interchange fees, which are significantly higher for credit card transactions. Some banks offer rewards for debit card usage, but only if you use the debit card as a credit card (with no PIN entered), as the bank gets paid a higher interchange fee from the merchant that way. There are a few banks that offer debit card reward programs even based on PIN-based transactions. Bank of America has a few of them.

One of them, the Keep the Change program, rounds up all debit card purchases to the nearest dollar amount and deposits the difference into your BofA savings account. It’s not actually a “rewards” program, per se, but BofA matches 100% of the Keep the Change savings for the first three years, and after that they match 5% a year. The total maximum match is $250 per year. Purchases with rewards or ATM cards aren’t eligible for matching. There’s no fee for this program, but the savings account only pays a measly 0.10% APY as of 8/3/10. The program may be a benefit if you already have BofA accounts or if you need help putting a few dollars away every month, but if you’re already getting a significantly higher interest rate elsewhere and are earning more than $250 per year, the switch wouldn’t be worth it.

For a true debit card “rewards” program, BofA offers a US Airways or an Alaska Airlines Debit Card. For these offers, you receive 3,000 bonus miles after making your first purchase, and you receive one mile for every $2 in purchases. If you make a purchase directly from US Airways or Alaska Airlines, you earn one mile for every $1 spent. Both programs have an annual fee of $30, and you do not earn miles on ATM transactions or other quasi-cash transactions, or tax payments. The offers are not available in Washington and Idaho.

Chances are you have to have a debit card anyway, so it can make sense to have a debit rewards card program. You should weigh all factors before jumping into a debit card program, however. The BofA programs mentioned above may be beneficial if the miles gained from the money spent on your debit card would more than make up for the annual fee, but you also have to be willing to forgo interest on the money in your checking account. Bank of America’s basic MyAccess Checking offers no interest (but there is also no monthly maintenance fee and no minimum balance). If you keep a higher checking account balance, BofA’s Advantage with Tiered Interest Checking offers up to a 0.25% APY, but if you don’t maintain a minimum $10,000 balance, you’ll be hit with a $25 monthly maintenance fee.

For the best information on debit card rewards, click here.