Free transactions?!? Amex pays me (in cash) to make transactions using their credit card, that's a heck of a lot better than free in my book. Also how is security better with the debit card?
I think since debit cards acts more like cash, it enables them to withdraw money or to have the cost of purchases charged directly to their bank account. Service charges are levied. And although they don't get rewards like credit cards, they are not being charged with interests and all that as well.
There is a little trick to avoid being charged interest on your credit card - its called paying off your balance every month. If you are still confused, watch this video, it explains everything: http://videosift.com/video/SNL-Dont-Buy-Stuff-You-Cant-Afford
I have a 6 digit pin number, with a credit card number I can make purchase where ever I want over the phone or internet and all I need is your card number. Even in person all I need to do is forge your signature and I have what I want. Credit card fraud costs credit card companies/consumers 500 million per year. With debit card fraud the amount of work needed to swindle people is more considerable. Usually they use fishy machines that keep your magnet information and use cameras to catch you inputing your pin number. In the end with both types of cards you will get your money back if someone steals from you, but credit card fraud is alot more successful and easy to do. As far as Amex giving you cash on your purchases, do you pay a yearly fee for this card? I assume there is an interest rate for outstanding balances? Alot of businesses around here don't even take Amex...so the benefit of 2% cash seems to be not worth the downsides.
I'll grant your point about the PIN security but with a debit card your money is gone from you bank account until they agree to put it back (possibly causing other payments to bounce), with a credit card if there is a fraudulent transaction you just dispute it and that's the end - you are never out the money even temporarily. Amex does not have an annual fee on its Blue Cash card, its 5% cash back on gas,groceries and drugstores and 1.25% on everything else. I have no idea what the interest rate is as I never carry a balance so its of no concern to me. Not pushing Amex, plenty of other Visa/Mastercards with different rewards (airline miles, etc) - whatever floats your boat.