The process of collecting points and miles can be intoxicating at times. We all know the adrenaline rush associated with snagging a large credit card signup bonus, redeeming miles for a free flight or exchanging hotel points for a vacation.

It can be so intoxicating, in fact, that we sometimes ignore the cost of accumulating those points and miles. With a few notable exceptions, the most rewarding credit cards also come with the highest annual fees. Wouldn’t it be wonderful if there were debit cards that rewarded us for spending, minus the fees and without the danger of accumulated interest charges on unpaid balances?

Prior to the financial crisis of 2008, there were many debit cards that offered travel rewards. After the passage of the Dodd-Frank Act and the Durbin Amendment, it became unprofitable for debit cards to compete in the rewards arena. However, there are still some debit cards that allow customers to earn points or miles, and even more that enable cardholders to accumulate cashback. Here are some of the best:

Suntrust Delta SkyMiles Debit Cards

These are available in both a personal and a business version. Both give you 5,000 SkyMiles after your first PIN Point of Sale or signature-based purchase, and 1 mile for every $2 in purchases thereafter (there’s a 4,000-mile monthly limit on the World Debit card and a 2,000-mile limit on the Business Debit Card). Both cards allow you to earn miles on all direct Delta purchases, and your miles don’t expire. The annual fees are $95 for the personal card and $120 for the business version.

Discover Cashback Debit

This card gives 1% cashback on the first $3,000 spent each month. You can redeem the cashback as a credit to your bank account or transfer the credit to your Discover credit card if you have one; either way, there are no fees associated with the debit card. There are some exclusions such as ATM transactions, loan payments, money orders and other cash equivalents.

Chase Disney Visa Debit Card

If you have a Chase checking account, you can apply for this card at your branch. It gives discounts to Disney aficionados on merchandise purchases, dining, meet-and-greet experiences and Disney cruises. Some restrictions apply, so read the fine print to determine if your travel patterns make this a worthwhile card to have.

American Express Serve Cashback

You earn unlimited 1% cashback with this card, but it’s a prepaid debit card; it’s not tied into a checking or savings account, and you’ll need to load money onto the card to use it. There’s a $7.95 monthly fee (except in New York, Texas and Vermont), so the break-even point is $795 in monthly purchases.

Axos Bank Cashback Checking

Eligible signature-based transactions earn 1% up to $2,000 per month (make sure you select credit rather than debit on point of sale machines). You’re required to maintain an average daily balance of at least $1,500 in your checking account to qualify for the 1% rate, and there are exclusions (purchases at grocery stores and supermarkets, wholesale clubs and superstores, discount stores, financial or money transfer establishments and the U.S. Postal Service don’t qualify).

PayPal Business Debit Mastercard

You earn 1% cashback on eligible purchases, but they must be coded as credit transactions (PIN-based sales don’t count). There are ATM fees but no annual fee, and the card is only available in a business version.

Are debit rewards cards worth it? Looking at the above information, here’s the plus side:

• For the most part, these debit cards are exempt from the annual fees charge by rewards credit cards (which can sometimes be stiff).
• Since they’re based on your bank account, they function as a variant of a secured credit card—there’s no credit check involved, and no danger of being turned down when you apply.
• In addition, you can’t carry a monthly balance and get hit with outsized interest charges.
• Most of them are cashback cards, so the rewards can be more immediate than those earned from credit cards awarding points and miles.

However, there are downsides as well:

• These cards don’t report to the credit bureaus, so they can’t help you build your credit score or profile.
• Fraud protections are not as comprehensive as those given by credit cards. Most credit cards will cover you for all fraudulent charges, or at most limit your liability to $50; with a debit card, you could be responsible for all charges on your account.
• There may be monthly fees, ATM fees or foreign transaction fees.
• You won’t get the auxiliary benefits of some credit cards such as trip cancellation or delay insurance, baggage insurance or roadside assistance.

Remember, too, that there are rewards credit cards without annual fees. They range from cashback cards such as Blue Cash Everyday from American Express and Citi Double Cash, to miles (the AAdvantage MileUp card from Citibank) and hotel points (Hilton American Express card) and more.

Your best strategy might be to view these two categories of cards (credit and debit) as having entirely different purposes. Travel rewards cards may be great when you’re on the road but they’re generally not as useful at the supermarket, and there may be times when cashback could be more valuable than points and miles. If you’re someone who likes to keep close tabs on your daily expenditures, a cashback debit card may be perfect for you.

Source: frugal travel guy