Cash Back on Debit Cards

So... I've been making a lot of purchases on my credit card and paying it off every month, in part to get American Express' payment protections, but mostly to get points. And, it's kind of a crappy points program -- I can get 1 % back, but only if I take it in big box retailer gift cards (if you got a big box retailer gift card from me for Christmas, that's why,) and usually I get half a percent I can spend on high premium items through their shopping website.

So, crappy.

Go Daddy sent me an offer for a 3% cash back card, but that turns out to only be on purchases of fuel, dining and office supplies. I buy very little fuel and very few office supplies, and 'dining' deals usually insist that you eat at large national chains, which runs counter to my shopping principles. However, this sparked a little quest, and I headed over to BankRate.com, as I always do in times of such uncertainty -- these are the people who told me that only Countrywide is offering a better rate on CDs than I'm getting on my eTrade savings account. You gotta love the mortgage lenders, but I'm really worried that no savings mechanisms seem to beat inflation. Gold's got a lot of fluctuation, diamonds will all lose value at once if DeBoers decides it should, it's hard to know where to hide. Ah, well, that would be a different blog post.

BankRate has a story on cash back debit cards! Cash back debit cards! I can get free money without borrowing anything. Now, these are all banks you probably don't want to do business with -- Chase, Bank of America, Citi, WaMu -- as they go down the shitter they'll expend a lot of brainpower on extracting money from their customers. I know this sounds contradictory, but I expect banks holding a lot of mortgage debt to be somewhat more generous and trustworthy than banks holding a lot of collateralized debt obligations.

I suspect that everyone else already knows this. It's easy to underestimate how complex the world we live in is, until you find out something that everyone else already knows -- drinking alcohol while taking antibiotics nearly killed me a few years back. I express my emotions largely with old television comedy skits, hence the link: Socrates is condemned and drinks the hemlock, then he's pardoned. He gets up to go, and receives some bad news.

Look, I only know general things. What is truth, what is justice. I never learned details like what is poisonous and what is not poisonous.... It was always, 'Socrates, what is truth?' 'Socrates, what is the nature of the good?'... And not ONCE did anyone ever say, 'Socrates, hemlock is poisonous.'"

Video reenactment here.

Anyway, my anti-Discover-Card bias has been shaken by the idea that they'll give me 20 % for shopping with top online retailers. But, it's sleazy. Of the retailers they list, I only ever shop at TigerDirect.com. Only a few high premium sites like FTD.com and magazines.com give you the full 20 %. And, they require that you go to the retailer web site through their web site, which is the sleazy part.

1. It's a rule that's easy to forget, which lets them pay out less than they seem to promise to
2. It warns the retailer that you're expecting money back before they show you goods and prices. I buy almost exclusively clearance and heavily discounted items online, and I worry that these would go away.

And they change the categories in which I'd get 5% cash back four times a year. Does this sound incredibly suspicious? Building on my existing distrust of DiscoverCard, which comes from having done a lot of business with them, I'm staying away.

And there's more. Capital One will give me a "Decoupled Debit" credit card which immediately pays itself off from my checking account -- no interest, cash back. And I can tie this to any checking account, such as INGDirect's Electric Orange, which'll pay me 2.25%. Tempo apparently delivers infrastructure for the delivery of similar products, used by CVS and Pathmark as loyalty rewards. CVS is testing this out in Indianapolis, and I don't know where my nearest Pathmark is. And I can't find any information from Capital One on the Decoupled Debit program.

So, back to credit cards. BankRate eventually sends me over to CardRatings.com, which recommends (1) DiscoverCard, which, again, I distrust, and (2) a cashback Blue card from AmEx. Apparently my mistake was in getting a rewards card when I could have had a cashback card. 5 % at supermarkets, gas stations and drugstores -- what are they charging the vendor! -- and 1.5 % for everything else. So, OK. Let's see how this works out.