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Rewards Debit Cards: How Do They Work?

Aug. 10, 2012
4 mins
A woman hands her credit card to the employee at a flower shop

Who doesn’t love a little payback? Canadian consumers certainly do! Financial products with perks – like rewards credit cards – are in high demand. In fact, 40% of RATESDOTCA visitors regularly check out our Rewards Credit Cards section to see what’s up for grabs. The catch, though, is that regularly using your credit card for the sake of raking in perks can cause more harm than good if you’re not the disciplined kind. If you’re not in the habit of paying off your balance ASAP, your regular spending will rack up more debt than rewards – fast. That’s just one of the reasons Rewards Debit Cards are starting to emerge as an option for perk-hungry shoppers.

Rewards Debit Cards and Retailers Go Hand In Hand

Rewards debit cards use the same concept as the credit variety – you’ll receive points of some kind based on every dollar you spend. Depending on the card, you may receive points for all of your purchases, or only at certain retailers. Generally, these cards are the product of a bank and retailer partnership. The bank will offer a special chequing account for customers interested in receiving the retailer-specific rewards. They offer the same debit services as any other traditional chequing account, but will rack up points (and sometimes cash back) when you shop at the associated retailer.

Perks and Pitfalls Of Rewards Debit Cards

As with the credit variety, you should be aware of your spending patterns before hopping on a retailer’s rewards bandwagon. Some (but not all) do tack on an annual account fee, or higher debit transaction costs in exchange for the rewards. Just as you wouldn’t want to pay a fee for flight perks if you’re not an avid traveller, the same concept applies here: if you truly shop regularly at the card’s retailer partner, then you may find their debit offerings to be worthwhile.

Another way debit differs from its credit cousin – some accounts will actually reward you more for good spending behaviour. For example, you could receive a huge flux of points for setting up a direct deposit for your paycheque into the account. Some also offer monthly or weekly bonuses if you keep an average minimum balance.

A Few Rewards Debit Card Options

While current debit offerings are a bit sparse compared to available credit options, there are a few solid picks out there.

RBC Shoppers Optimum Bank Account

Partnered with Shoppers Drug Mart, this card is like the ultimate extension of the mega-popular Optimum card. A bit of a disclaimer here – as I rely on Shoppers for everything from paper towel to portable barbecues, my Optimum card has seen a lot of action. In fact, it’s one of the very few store rewards cards that hasn’t collected dust in my wallet, so I’m pretty excited by this debit card’s ability to collect an Optimum point on the dollar for purchases made anywhere – not just at the drug store. You’ll also get 10 points on the dollar when you do use the card at Shoppers, as well as a sign up bonus of 50,000 points ($85 value) when you open the account. While this card offers unlimited transactions, it does have a $10.95 monthly fee – so assess whether you’re an avid-enough Shoppers user (like yours truly) to ensure it’s actually a payoff.

SCENE ScotiaCard

Movie buffs rejoice – Scotiabank and Cineplex have teamed up for provide the only entertainment-rewards system in Canada. The SCENE program, which rewards spending with free movies, concessions and VIP theatre perks, offers both a credit and debit option. Users will get 5 points on the dollar for movie ticket and popcorn purchases at Cineplex locations, and 1 point on the dollar on all other retail debit purchases. Every 1000 SCENE points can be redeemed for a free movie ticket. Cardholders will also get 10% off at the concession stand – a good thing since popcorn prices are out of this world! Other perks – you’ll get 1000 points for the first purchase made with the card (must be within 60 days), and you’ll get another 1000 if you set up your SCENE Scotiacard account for your paycheque direct deposit.

BMO Air Miles Debit Card

BMO offers the Air Miles chequing account, which will reward every $30 spent with 1 reward mile. The account does have a $13.95/month annual fee, but does offer unlimited transactions. The card also offers international spending at no additional cost, free overdraft protection, and will gift those with a minimum monthly balance of $3000 with 50 additional miles per month.

President’s Choice Financial No Fee Bank Account

If you’re looking for rewards that ease the daily cost of living, you can’t get more practical than one that offers free groceries. You’ll get 5 PC Points for every dollar spent at any participating store that carries President’s Choice products (Loblaws, Great Canadian Superstore, Joe Fresh, etc.), and every 20,000 points equals $20 off your grocery bill. The account also features free transactions at any PC Financial or CIBC bank machine, 10,000 points for direct deposit and 250 PC points monthly for a minimum balance of $1000, and 1000 points for balances over $5000. Further sweetening the deal, they’re offering a free tub of ice cream for accounts opened until September 7.

Penelope Graham

A first-time homeowner and newbie investor, Penelope Graham is the quintessential millennial, navigating the world of personal finance and wealth management. A self-professed monetary policy nerd, she follows the often-controversial housing market closely and specializes in mortgage, credit card and personal finance news.

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