Banks are rolling out new debit card fees. I never was a big fan of debit cards (and favor credit cards instead), but I know many of you swear by debit cards, so let’s start brainstorming!

Beginning in 2012, Bank of America will charge $5 per month for debit card use. In addition, Chase and Wells Fargo are testing $3 per month fees in various locations. Will other banks follow their lead? Let’s explore the options and alternatives to debit card fees.

Update: Bank of America abandoned their plan to charge the debit card fee. If your bank is still charging a debit card fee, check out the ways to avoid the fees below.

Ways to Avoid Debit Card Fees

1. Use cash. Just the other day Amanda discussed 6 reasons why you need to carry cash. The new debit card fees just added a 7th reason! Use cash and avoid the fees.
2. Use credit cards. Is it finally time to make the switch to a credit card? If you are going to do so, you might as well get a rewards credit card like the Chase Freedom card with a $200 sign up bonus right now, and no annual fee. Not only will you save the debit card fee, you’ll come out ahead with the cash back and sign up bonus. If you are worried about your ability to manage a credit card, treat it the exact same way you did your debit card, subtract the purchases from your checking account on the day you make the charge. If you’re really worried about it, you don’t have to wait for a statement, you can always transfer the payment from your checking to your credit card the same day your make your purchase.
3. Write a check. I know, old school. But you can. For free.
4. Use prepaid debit cards If you’re honest with yourself and you know you can’t manage a credit card, you could consider using prepaid American Express gift cards. They’re prefunded with a set a amount and available online and in many grocery stores.
5. Use an online bank. You can also check out on online bank. While you won’t have a bricks and mortar branch to visit, many of the online banks, like Ally and ING won’t charge you for using their debit cards.
6. Don’t use the card. The rule is, if you don’t use it, you won’t be charged. You can still use the card to access the ATM and you don’t have to close your account or get rid of the card to avoid the fee.
7. Take your banking elsewhere. If you are furious, like I know many people are based on the news right now, check out other banks. Now might be the perfect time to switch to a rewards checking account. In addition, many local credit unions rarely charge the fees that banks do and will be happy to open an account for you. Our current bank, Schwab, has free checking, no fees, ATM reimbursements, and mobile check deposit. You may also want to check out Citi offering $400 to open a new checking account.

Debit Card Fees

The reason for the new set of debit card fees is to offset the lower amount banks can charge retailers. The law now says the maximum fee is 21 cents, down from an average of 44 cents before the law went into effect.

What other debit card fee alternatives can you think of?

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In the article 6 Reasons Why You Need to Carry Cash, I mentioned that only carrying around credit cards makes it a nuisance to make purchases from merchants who implement credit card minimum purchase requirements. In the comments section, multiple readers claimed that it is actually against the terms of service between credit card companies and merchants for merchants to institute minimum purchase requirements (per credit card merchant agreements). One reader, Eric, also was interested in finding out if any credit card company had pursued a case against a merchant for doing this. After doing some research, I found out some interesting information that I wanted to share with everyone.

Reasons for Instituting Minimum Purchase Requirements

The places where I have noticed minimum purchasing requirements are at local convenience stores, the cafeteria in the building that I work in, bakeries, etc. Merchants may decide to institute these for a few different reasons, such as to pass on the cost of credit card transactions to consumers (merchants have to pay hefty transaction fees to the credit card companies every time a consumer swipes a card), or to make more money from consumers who might not otherwise reach a $5 purchasing threshold. In my own experience, when I was famished in the past and looking for an afternoon snack (bag of Sunchips) in our cafeteria I’ve had to load up on candy bars, an iced tea, a banana, gum, and anything else necessary to meet the $5 credit card minimum charge — items I would not have purchased without that requirement.

Cases that Credit Card Companies Have Pursued

In an attempt to answer the Eric’s question, I spent a decent amount of time researching whether or not a credit card issuer has sued or otherwise slapped a merchant on the wrists for requiring a minimum transaction amount when using a credit card. I could not find anything (does anyone here know of any cases?).

However, as of July 2010, this no longer matters for most minimum purchase amounts.

New Law Makes Credit Card Minimum Legal

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which went into law in July 2010, there was a section that made minimum purchase requirements legal. The law states that merchants can now institute up to a $10 credit card minimum requirement, so long as they treat each card equally. A direct quote from the law states:

A payment card network shall not directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability (i) of any person to set a minimum dollar value for the acceptance by that person of credit cards…

Furthermore, the law allows the Federal Reserve to increase the minimum purchase requirements in the future.

It should be noted that the minimum purchases apply only to credit cards and does not apply to debit cards.

While I was surprised to not find any cases where credit card issuers have pursued penalties or warnings against merchants who instituted minimum purchasing requirements for consumers, it does not actually matter now because of the new law. That is, as long as the minimum amount is $10 or less. As a side note, this law came into effect last year, and I was surprised about this because I have not seen more companies institute minimum purchase amounts.

Have you seen an increase in the minimum purchase requirements? Will this influence your decision about whether or not to carry around cash only, credit cards only, or a mixture of both?

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Have you ever tried to put your utility bills on your credit card for some cash back only to realize that the utility company erases the benefit by charging you a fee?

If so, this week’s Free Money Friday is perfect for you. Discover is offering a new way to save money by offering an instant cash rebate of all applicable fees when you pay your utility bills on ChargeSmart!

How to Get ChargeSmart Utility Rebates

1. Sign up for ChargeSmart.
2. Select the utility company you want to pay.
3. Enter your Discover credit card info.
4. ChargeSmart will deliver your payment via electronic ACH transfer.
5. Discover will give you a rebate for any fees associated with your utility payment!

More on ChargeSmart

Fees. Depending on the biller (company you are paying), there is either a blended or flat fee associated with your transaction. The fee will be displayed before you proceed with your transaction.

Discover Rebate. This rebate works with all Discover branded credit or debit cards and will be in addition to any cashback program that your Discover card may already offer.

What Bills Can I Pay with ChargeSmart? You can use ChargeSmart to make payments towards your mortgage, auto loan, auto lease, education loan, or utility bill. You can even use ChargeSmart to pay bills to a company that doesn’t offer that option directly on their site.

Paying Your Mortgage. With ChargeSmart, the return of paying your mortgage with credit cards is back! Just make sure that your credit card cash rewards will be greater than the cost of the fees to make money on the deal.

Possible $10 Rebate on Other Payments

In addition to the utility rebate, we also found a few mentions that Chargesmart will give you $10 off all other payments (mortgage, auto, etc) which should help offset the fees and earn you more cash back from your credit card.

Discover Cards

If you don’t have a Discover card to use, here are some of our favorite Discover cards to use with Chargesmart:

• Discover More Card with 18 Month 0% Balance Transfer
• Discover Open Road Card with $150 Restaurant.com Gift Certificate
• Discover More Card
• Discover Rewards Calendar

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Chase is back with a sign bonus for the Chase Sapphire card!

I’m excited that the credit cards are increasing sign up bonuses to try to get our business again, since it means more free money for all of us.

How to Get Your Sign Up Bonus

1. Open a new Chase Sapphire card.
2. Spend $500 in the first 3 months.
3. Earn 10,000 bonus points – that’s $100 towards a flight or any other reward.
4. Points will post to your account in 6-8 weeks.

Chase Terms and Conditions

• This one-time bonus offer is for first time cardmembers with new accounts. Previous and existing cardmembers/accounts are not eligible.
• No annual fee.

More on Chase Sapphire

• Two points per dollar spent at restaurants & 1 point per dollar spent on all other purchases.
• Points never expire and there are no limits on how many points you can earn.
• Redeem points for travel, gift cards, merchandise, cash back and more.

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UPDATE: This offer is no longer available.

Happy New Year! If one of your New Year’s resolutions is to get out of debt, you’re going to love this one!

No transfer fee 0% balance transfers are back! What better way to kick off the New Year than the return of 0 transfer fees!

Discover More just launched a limited time 0% balance transfer no transfer fee card. The no transfer fee now tops my list of 0% Balance Transfer Credit Cards.

How to Get Your No Transfer Fee Balance Transfer

1. Sign up for the Discover More card by February 29, 2012.
2. Make a 0% balance transfer by August 10, 2012.
3. Get a no fee 0% balance transfer for 12 months.

Discover Terms and Conditions

• Limited time only on the no balance transfer fee.
• 0% intro APR on 0 transfer fee balance transfers for 12 months and 0% intro APR on purchases for 12 months.
• No annual fee.

Discover More Extras

5% Cash Back. The Discover More also qualifies for the 5% cash back that rotate quarterly, like travel, gas, groceries, and restaurants. All other purchases earn 1% cash back.

No Transfer Fee Limited Time. Discover plans to offer the 0 transfer fee only until February 29, 2012.

Balance Transfer Strategies. I love taking advantage of 0% balance transfers to earn more money. See my evolving credit card arbitrage strategies for more.

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The Chase Freedom Visa, which we already know is a great card, is offering a $100 sign-up bonus!

It’s a great offer to celebrate Free Money Friday before the holiday weekend!

How to Get Your $100 Bonus

1. Sign up for the Chase Freedom Visa.
2. Earn $100 Bonus Cash Back after you make $500 in purchases in your first 3 months. Qualifying transactions include purchases, balance transfers, and any checks that are used to access your account, and exclude cash advances.
3. 6-8 weeks after qualifying, bonus rebates which you can redeem for a $100 check, will post to your account.

Chase Freedom Terms and Conditions

• The Chase Freedom has no annual fee.
• For 5% cash back (see more below), you earn 1% on all purchases and 4% more in bonus categories for a total of 5%. 4% bonus earn is subject to a quarterly maximum.
• You do not earn cash back on balance transfers, cash advances, cash-like charges such as travelers checks, foreign currency, and money orders, any checks that are used to access your account, overdraft advances, interest, unauthorized or fraudulent charges, or fees of any kind.

More on Chase Freedom

Cash Back on Everyday Purchases. There is a 5% cash back offer in popular categories that rotate quarterly (i.e., gas, home improvement, department stores, etc.) and you always receive 1% cash back on everything else with no spending tiers. Plus, cash back rewards never expire.

Cash Back on Shopping. Earn up to 20% cash back when you shop at select merchants through Chase.

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Update: This offer is expired. Please see our credit card directory for current offers.

Citi’s sign up bonuses just keep getting bigger each week! Today’s Free Money Friday offer is another double offer: a $50 gift card and a 0% Balance Transfer!

How to Get Your $50 Gift Card

1. Apply for the Citi Diamond Preferred Rewards Card.
2. You will receive 6,000 bonus ThankYou Points after $300 in purchases are made with your card within 3 months of account opening.
3. Once these points post to your account, you may redeem for your choice of a $50 gift card good at leading national merchants or save them to use for other great rewards.

Citi 0% Balance Transfer

• 0% APR does not apply to cash advances.
• 0% Intro APR on Purchases and Balance Transfers. After that, the APR will be 12.99%-20.99% based on creditworthiness*. This APR will vary with the market based on the Prime Rate.
• The balance transfer fee is 3.0% of balance transfer amount, $5 minimum.
• New cardmembers only.

More on Citi Card

Perks. This card has no annual fee and offers 5x Thank You points on purchases at supermarkets, drugstores and gas stations for the first year.

Balance Transfers. Learn more about how you can still take advantage of balance transfer offers.

Purchases. Don’t forget you can also take advantage of the 0% without any fees by using it for purchases.

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Cash rewards credit cards are a fantastic way to get free money without much effort.

Chase Freedom, a card I’ve had forever, just sent me a new card in the mail with a copy of their 5% cash back calendar.

Of course they covered a lot of ground with cash back calendar that corresponds perfectly with our plans including working on the house and yard in spring, vacationing in the summer, and holiday shopping in the winter.

How to Get Your 5% Cash Back

1. Open a new Chase Freedom if you don’t already have one.
2. Enroll your card in the current offer.
3. You can enroll online once you get your card for the 5% cash back offer.
4. Earn 5% cash back rewards on the current category.

Chase Freedom 5% 2012 Cash Back Calendar

More on Chase Freedom Cash Back

Other Purchases. Other Chase Freedom purchases earn 1% cash back.

Sticky Notes. I usually write the current categories on a sticky note, and tape it to our cards. Then, when I can’t remember which categories are currently at 5%, I can glance at the list.

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UPDATE: The statement credit is no longer available but the rest of the details remain the same.

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Tracking the best cash rewards credit cards and optimizing our spending with each of the credit cards that pay cash rewards is a passion dear to my heart. It’s also a fun game to play!

With a constant changing landscape of cash rewards credit cards you always have to be on your toes to make sure you’re earning the most cash back on your purchases.

Current Cash Rewards Credit Card Plan

Here’s what our current strategy looks like based on our purchases.

American Express TrueEarnings Costco. We use our Costco card for 3% cash rewards on gas and restaurants, besides using it at Costco. If you don’t have one, you can get the costco sign up bonus for opening a new account.

Discover More Card. I’ll be dusting off our Discover More card for 5% cash rewards on gas starting in July. The cash rewards rotate, so we have to stay on top of the quarterly schedule. If you don’t have one, it’s a great time to sign up since they give you a $50 Sign Up Bonus, and you should be able to get it before July.

Chase Freedom. We’ve had a Chase Freedom for as long as I can remember. Chase also switched to a 5% cash back on quarterly categories that you have to remember to enroll in. They’re currently offering 5% on drugstore purchases through June.

2% Cash Rewards Credit Card

For the rest of our purchases, we use our Schwab credit card. Since they stopped accepting new applications for their 2% cash back credit card, if you didn’t get one, you’ll have to get the Fidelity Credit Card instead for 2% cash back.

Other Cards

We also have some old credit cards that pay 4% cash rewards for wireless service and groceries, but they’re long gone. Getting grandfathered into old programs is one of the best reasons we’ve kept so many of our credit cards open (of course the other reason is for the 0% balance transfer deals!)

Which are your favorite cash rewards credit cards right now?

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