[updated] Two Santander products you should know about

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[update 2/14/14, 5:55 pm: I just called into Santander to ask what a "Santander Select checking account" is, since the terms and conditions of the Bravo card say such an account is necessary to get the annual fee waived. The Rhode Island-based representative explained that there's no such thing. It's a product that's going to be launched later this year. In the meantime, if you apply for the Bravo card before March 31, 2014, the first year's annual fee is waived. Now you know everything I know.]

Over a year ago, I opened checking and savings accounts with the then-Sovereign Bank, the American division of the Spanish banking giant Santander. They were offering an enrollment bonus of $100 or $150, and I needed a convenient place to dump money orders I'd purchased with PIN-based debit cards at Walmart without undue risk to my primary checking account.

In the last few months, three big changes came out of Sovereign: they rebranded their US branches to Santander; they introduced an oddly lucrative banking product; and they launched a competitive cash back credit card.

extra20 Checking

The banking product Santander rolled out is called "extra20," and it works like this:

  • you hold linked checking and savings accounts with Santander that are registered for extra20;
  • if you receive $1,500 in "direct deposits" to the checking account each month, Santander will deposit $10 into the linked savings account;
  • if you, in addition, make 2 online bill payments using Santander's bill pay system, Santander will deposit an additional $10 into the linked savings account.

Note a few things:

  • If you don't receive the $1,500 in direct deposits, you won't receive either $10 bonus — and you'll pay a $10 monthly fee;
  • If you do receive the $1,500 in direct deposits, but don't make the 2 online bill payments, you'll still have the $10 monthly fee waived and receive $10;
  • I'm not up to speed on what kinds of transactions Santander considers "direct deposits;" it's very likely withdrawals from PayPal, Bluebird, and Venmo accounts will count, but I can't guarantee that.

Fortunately, my employer has an extremely flexible online payroll system that allows me to divvy up my paycheck among accounts however I like, so it's not a problem for me to receive exactly $1,500 in "real" direct deposits each month.

Santander Bravo MasterCard

This second Santander product is only worth considering if you also sign up for extra20, since the card's $49 annual fee is waived for cardmembers with Santander checking accounts.

With the Santander Bravo MasterCard, you earn 3 points per dollar spent at gas stations, grocery stores, and restaurants, on up to $5,000 in cumulative purchases in all three categories each calendar quarter. After spending $5,000 in those categories, and on all non-bonused purchases, you'll earn 1 point per dollar.

But what's a point worth? While the promotional material says that they can be redeemed for "cash back," if you visit Santander's rewards center the only options listed under "cash back" are prepaid MasterCards. It's not a problem to liquidate prepaid MasterCards, but it's not exactly the same as cash back.

So, first the good news: the Santander Bravo has a much higher limit on bonused earnings at gas stations than the Bank of America Cash Rewards Signature Visa, which also gives 3% cash back, but only on the first $1,500 (vs. $5,000) in eligible spending each calendar quarter. If you're deciding between the two, you should obviously go for the Bravo, together with an extra20 package that waives the card's annual fee.

The problem with the Bravo MasterCard is that it's not entirely clear what the card's competitive advantage is over other, well-known credit cards. Assuming you can still purchase Vanilla Reload Network reload cards, PayPal My Cash cards, or prepaid PIN-based debit cards at gas stations, there are already a number of insanely lucrative options to choose from:

  • US Bank Flexperks Travel ($49 annual fee): 2 points per dollar at gas stations, worth 3-4% in paid (mileage-earning) travel redemptions, plus triple points on transactions coded as "charity;"
  • Chase Ink Bold/Plus ($95 annual fee): 2 flexible Ultimate Rewards points per dollar, worth 2.5% in paid travel redemptions, plus opening up other lucrative earning opportunities and partner transfers.
  • Even the American Express Hilton HHonors Surpass card ($75 annual fee), which gives automatic HHonors Gold status and 6 HHonors points per dollar spent at gas stations, plus Diamond status after spending $40,000 within a calendar year, is arguably more valuable than 3% cash back.

Conclusion

It's a tough call for me to pass judgment on the Bravo card, because Santander is basically doing everything right: a waived annual fee for checking account holders; high quarterly limits on bonused spend; and the ability to redeem points at 1 cent each for prepaid MasterCards (compare Citi's ThankYou products, which punish you for choosing to redeem your ThankYou points for cash).

On the other hand, gas stations, grocery stores, and restaurants are extremely competitive bonus categories, and the market is pretty saturated with outstanding cards as it is — although those cards do often come with substantial annual fees.

In short, I think the Bravo card is a pretty good card for a beginner who's interested in earning some extra cash and learning the ropes, but isn't willing to commit to some of the more elaborate techniques we engage in. In that way, it's a great complement to the 2% cash back Fidelity Investment Rewards American Express, especially since you can use it at merchants that don't accept American Express.