First off, not everyone can get a credit card at all, never mind one that gives you a % back on your purchases. Sometimes a debit card is the only way to go for some people. We use both, depending on where we are shopping.

Its not a card to cancel as its a debit card, and you only get your purchases rounded up when used as one.

You are right that putting $37.50 or $50.00 into an ING or Emigrant account is better…we do that too. But for some people, saving money is a near impossible task, so if they are using this debit card as they normally would use one, its nice that they automatically get to keep a little bit of money at the end of the month.

1. When most people use a card (debit or credit), they have a tendency to spend more money than they would if they paid cash. To learn why, check out “Why Smart People Make Big Money Mistakes…” by Belsky and Gilovich for an explanation. Basically it’s because you’re disconnecting the pleasure of getting something you want NOW from the pain of parting with the money

2. The match is really small compared to what you would get if you made the same transactions with a cash back card. Let’s say you do 3 transactions/day at ~$10/transaction and the roundup is on average 50 cents. Assuming 300 days of spending, you will have done 900 transactions, spent $9,000, saved $450 of your own money and gotten ~$130 in matching (they only match 100% for 3 months, not 1 year). Going forward you’ll only get $22.50/year in matching money (5% of $450). If you use a 1% cash back card, you would get $90 each year.

SO…my opinion is that the best thing to do is to get the card and use it like crazy for 3 months so you maximize the match. After that, cancel the thing, get a 1% cashback card and set up an automatic $37.50/month deposit into a higher yielding savings account than BOA’s (I couldn’t find any savings account on their site that paid more than 1% unless you had big balances). You’ll end up with more savings better interest rate.

That said, switching to paying with cash and setting up an automatic savings of $50/month is probably the BEST thing to do…you’ll spend less AND save more doing this.