Call it a sign of the times that when consumer card advocate Bill Hardekopf of LowCards.com praised two cards' debit rewards programs, they were not cards issued by financial institutions.
In fact, they really weren't debit cards at all, in the sense of cards that used a credit or EFT processing system to validate the transactions. Instead they were the sorts of cards that debited cardholders checking accounts directly through an ACH transaction.
The two cards were distributed by the Target retail chain and the Shell oil company. Each card offers consumers discounts on purchases they make from the retailers, often more generous rewards than those that used to be offered by financial institutions on their debit cards.
But Hardekopf highlighted some challenges as well. Target's disclosures say the retailer may report transaction information to the credit reporting agencies and applying for the card may trigger a credit report. Purchases on their card will not carry the same consumer protections that debit cards do and Target said it will share personal information with its affiliated marketing partners unless a consumer takes the time to opt-out with a form that arrives with the card.
Shell will give the consumer a 10 cents per gallon discount on gasoline purchases made with its card until April 30, 2011 and two cents per gallon on purchases after that. Hardekopf warned that this card is also an ACH card and could trigger ACH NSF fees for purchases made on overdrawn checking accounts.