Mileage-earning debit cards make no economic sense for banks.
The Durbin Amendment to the Dodd Frank financial reform law signed in 2010 limits the cost to merchants of debit cards. Banks don’t earn very much any more off of debit card transactions, so it doesn’t make sense to ‘pay’ consumers to make those transactions. In fact, buying miles costs the banks more than the fees they earn. So mileage-earning debit cards are almost a thing of the past.
They still exist in a couple of places, such as with Bank of American’s Alaska Airlines debit card (earns 1 point per 2 dollars in spending).
And from Suntrust Bank, which issues the Delta Skymiles World Check Card and offers 1 Delta mile per dollar spent.
All I can fathom here is that Suntrust — one of the few banks that failed federal government stress tests in 2012 — is doing its darndest to incentivize deposit accounts, even at a loss.
I personally have no qualms about holding a Suntrust bank account, but I probably wouldn’t want to exceed FDIC coverage limits in that account.
Delta Mileage-Earning Debit Card Now Open to Everyone
The offer used to be available only to residents of Alabama, Arkansas, Florida, Georgia, Missouri, Mississippi, North Carolina, South Carlona, Tennessee, West Virginia, Virginia, and Washington DC only. Suntrust is strong in the South and Mid-Atlantic.
Apparently the SunTrust – Delta Airlines miles offer for the bank’s debit card (5,000 miles and 1 miles/$1) is now available to everyone in the U.S. and can be obtained online. Today I was able to access an account application online whose pulldown menue for states included all of them.
There’s a 5000 mile signup bonus and a $75 per year annual fee.
Earning Miles for Tax Payments — Cheap
It doesn’t make sense to pay taxes on a credit card just to earn the miles, since the fees for doing so are generally higher than the value of the miles earned.
It can make sense to use tax payments to help you hit minimum spending requirements for credit card bonuses. And it might make sense to use tax payments to help meet spending requirements for certain credit card benefits (if I wanted to stay a Delta elite in 2014 I might put tax payments on a Delta co-branded credit card so I didn’t have a minimum spending requirement in ticket purchases for that status).
But not for the miles.
Debit cards are a different story. PayUSATax.com will charge a flat $3.49 fee no matter how big a tax payment you make. So paying your taxes for the miles does make sense with a mileage-earning debit card.
Bank of America debit cards expressly do not earn miles for tax payments. But the Suntrust Delta debit card does.
Buying Money With Your Debit Card for the Miles
If you don’t have access to Vanilla Reload cards, you can still earn miles with Bluebird.
Many folks like to ‘buy money’ at CVS, load it onto their free Bluebird card, and then use Bluebird’s online billpay to pay mortgage or rent or just have a check mailed to their spouse. Or withdraw the cash from an ATM.
But Vanilla Reloads aren’t at all CVS stores, and those that have them may not be willing to put the purchases on a credit card.
If you can’t find Vanilla Reloads purchasable by credit card, you can still load Bluebird with a mileage-earning debit card at Walmart for free (you can do it online too, but there’s a $2 fee and $100 limit so the economics of that don’t work out).
Loading with a debit card is limited to $1000 per calendar day and $5000 per calendar month, and is a shared limit with Vanilla Reload card funding (so you cannot do a combined $10,000 a month — it’s $5000 total for loads via Vanilla and via debit cards).
Using your Delta debit card from Suntrust means you can earn up to 5000 miles per month with this technique — and it doesn’t even come with the fees that would accompany the purchases of Vanilla Reload cards.
I have a feeling lots of folks beyond the Mid Atlantic will be signing up for Delta debit cards from Suntrust.