Most people see debit cards as only a vehicle for making payments or as a means to make ATM withdrawals. But debit cards offer a host of benefits beyond these two functions. Just like credit cards, debit cards can also give rewards such as airport lounge access, vouchers and personal accident insurance. The only benefits that a debit card cannot give compared to a credit card are an interest-free period and the ability to spend money on credit. However, some debit cards now have the facility to convert debit card purchases for select merchants into EMIs.
In general, the number of benefits is greater on premium debit cards rather than those which come with low value or no-frills bank accounts. These debit cards are issued against accounts with a relatively high minimum balance. Maintenance of minimum balance also leads to banks waiving fees for such debit cards, which would otherwise be charged. For example, a debit card issued by one of India’s largest private banks requires an initial funding of the account at ₹5 lakh or more. There are also conditions for average quarterly balance and total relationship value. For salary accounts, the account should have a monthly net salary credit of more than ₹3 lakh. In return, the card offers reward points and airport lounge access, a personal accident cover of ₹15 lakh and an air accident cover of ₹1 crore. However, such insurance cover may have terms and conditions attached such as a requirement to book the ticket through the card.
Another card of a major private bank offers 1% cashback up to ₹750 per month at select merchant categories. It also offers fire and burglary insurance up to ₹2 lakh for claims made within a certain period of purchase. This card also offers airport lounge access. Last but not least, debit cards across banks are offering contactless payments, which allow you to make payments by simply tapping the card against point-of-sale (PoS) terminal. Many people do not use this feature because they fear of misuse. However, the maximum amount allowed by RBI for such transactions is only ₹2,000.
There are two points that customers should note while considering debit card rewards. First, the rewards on credit cards (of similar spending value) tend to be higher and hence if you are choosing between the two based on this factor, debit cards will not give you as much bang for your buck. Second, like credit card benefits, debit card benefits also expire. You may have accumulated several debit card benefits over the course of a year and lost them due to expiry. Keep a track of them and use them on time. Finally, do not choose a bank based on debit card rewards. It will give you some added advantages but there are far more important things to consider, such as deposit rates, tech-friendliness, customer service and branch network.
